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San Diego Water Authority Enters High-Stakes Water Fight

For San Diego's regional water agency, its largest supplier is also its biggest adversary.

A trial beginning Tuesday in San Francisco will test the San Diego County Water Authority's claim that the region's 3.1 million residents are subsidizing nearly all the rest of Southern California. Its lawsuit against the Metropolitan Water District of Southern California brings to a head a long-running dispute in the epic quest to bring water to parched terrain, and the outcome may affect the pocketbooks of 19 million people.

The San Diego County Water Authority, which supplies the city of San Diego and 23 suburban cities and agencies, claims that Los Angeles-based Metropolitan overcharges for bringing Colorado River water to the Pacific Coast on its 242-mile aqueduct. Metropolitan, a wholesaler that counts San Diego as the largest of its 26 customers, is accused of using the alleged windfall to give lower rates to cities and agencies in Los Angeles, Orange, Riverside, San Bernardino and Ventura counties.

"How can an agency treat its largest customer in this fashion?" said Dennis Cushman, assistant general manager of the San Diego County Water Authority. "It's about money. Money and power."

The lawsuit illustrates how badly relations have deteriorated between the close business partners.

Last year, the San Diego agency launched an unusual public relations offensive with a website that alters its largest supplier's official seal to read, "The Truth About Metropolitan Water District of So. Cal." The site offers internal documents from Metropolitan member agencies that were obtained under California's public records law, including references to a "Secret Society" and an "anti-San Diego coalition."

Metropolitan disputes the allegations that its rates are unfair and says it won't engage in a war of words for public support.

"They're carrying on some sort of campaign. We're just trying to defend the lawsuit," said Jeffrey Kightlinger, Metropolitan's general manager. "We're responding in court. We're not going to the media."

San Diego ended its complete dependence on Metropolitan after a drought tightened the spigot in the early 1990s. It began a costly effort to diversify supplies that includes construction of the Western Hemisphere's largest desalination plant in Carlsbad and, most significantly, a 2003 agreement with California's Imperial Valley for the nation's largest farm-to-city water transfer.

Metropolitan supplied 46 percent of San Diego's water this year, down from 95 percent in 1991. By 2020, it will supply only 30 percent. There's just one catch: San Diego needs Metropolitan's aqueduct to get the water it buys from Imperial Valley.

San Diego, which has long considered building its own plumbing, recently found it would cost at least $2 billion to lay canals, pipelines and tunnels from the Colorado River. Metropolitan's 72-year-old aqueduct has plenty of room, so it would be like building a freeway next to an existing freeway that never has traffic jams.

The lawsuit, filed in June 2010, asks the judge to declare Metropolitan's rates for transporting water invalid. Each side has spent millions of dollars in attorney fees.

The San Diego agency says it is being overcharged $57 million this year — which translates to $73.60 for an average household of four — and between $1.3 billion and $2.1 billion over its 45-year agreement with the Imperial Valley.

Metropolitan has argued that the lawsuit is an effort to recover the cost of Imperial Valley's more expensive water — $887 per acre-foot billed by the Imperial Irrigation District compared to $560 billed by Metropolitan in 2012. (San Diego agency officials note that Imperial's water rights are higher on the pecking order than Metropolitan's if there is a shortage.)

Superior Court Judge Curtis Karnow won't consider Metropolitan's claim that San Diego is trying to unload the higher cost of Imperial Valley water on its neighbors, nor will he allow discussion of documents that San Diego obtained under the state public records law referring to a "Secret Society."

Several Metropolitan member agencies began meeting years ago to discuss the rate structure challenge and other issues. Two emails from one participant refer to the group as the "Secret Society," a remark that Kightlinger has said was a joke.

Karnow, a Democrat appointed by Republican Gov. Arnold Schwarzenegger, specializes in complex litigation and is known for running a tight schedule. He will limit each side to 12 hours of arguments. He is expected to issue a written ruling after the trial.