On January 25, 2016 the California Supreme Court published a long-awaited opinion in Monterey Peninsula Water Management District v. California Public Utilities Commission (California American Water Company) (Case S208838). In the first Supreme Court decision to address CPUC jurisdictional issues for over 25 years, the ruling reverses a California Public Utilities Commission that interrupted collection of the Water Management District’s fee.
The Supreme Court decided the Public Utilities Commission lacked jurisdiction to review the District fee and remanded the matter to the PUC for action in accord with this direction.
The January Supreme Court decision restores the Water Management District’s 2013 challenge to the CPUC regarding collection of the District User Fee. The fee is used to develop water supplies, mitigate for Cal-Am water diversion impacts, and undertake water conservation activities. It was collected as a surcharge on the Cal-Am bills since in 1984, but ended in 2011 when a CPUC Administrative Law Judge interrupted its collection.
District General Counsel, David C. Laredo said, “The Supreme Court agreed with the District that the CPUC cannot reject a government fee collected through the utility bill.” The CPUC had previously limited its review to ensure the fee was separately identified on bills and was collected only from customers residing within the boundaries of that government entity.
Laredo added, “The Supreme Court found the CPUC’s prior decision to be wholly at odds with the clear and long-standing precedent that the Commission lacks review authority over public entities unless that authority is expressly conferred by the Legislature.”
District Board Chair Jeanne Byrne heralded the decision, saying “This affirms the Water Management District’s actions that fund its mission to develop the community’s water supply, implement conservation, and mitigate environmental impacts. We assure our constituents that reinstatement of any fee will be done in a careful and thoughtful manner, and all funds will be used to only cover costs actually needed to provide services, consistent with state and local law.”
The Legislature imposes specific checks and balances for Water District expenditures, through both the District Law and under the Constitution (Articles XII C and XIII D). These rules ensure charges cannot exceed the cost of water-related services and must remain proportional to the services provided. District General Manager David Stoldt said, “We will examine near-term financial needs to bring water supply projects to the finish line, as well as ongoing needs to respond to State-mandates. We must also consider revenue-neutral actions to fund expenditures previously reimbursed through contracts with Cal-Am, or to reduce portions of the Water Supply Charge.” As an alternative to the interrupted User Fee, the District had adopted a Water Supply Charge in 2012 to replace the lost revenue.
Stoldt said, “The Board will not make hasty decisions, but will examine all alternatives to ensure constituent services are provided at the lowest cost.”
