Oildale Mutual Water Co. v. North of the River Municipal Water District

Statement of the Case

Appellant Oildale Mutual Water Company (Oildale) filed a complaint against respondent North of the River Municipal Water District (District) and the individual members of District’s board of directors alleging that District was overcharging Oildale for the water that District was providing under a water service agreement. The complaint further sought a declaration that these charges were unconstitutional under article XIII B of the California Constitution.

Following a bench trial, the court issued a statement of decision. The court held the District was bound by the water service agreement in setting the water rates and that under this agreement the rates must represent the costs reasonably borne by the District in providing water to Oildale. The court found that District could not properly charge Oildale for a portion of the costs relating to certain facilities which were not used to deliver water to Oildale. The court further held that Oildale did not contract for, did not need and did not want these systems to be potential backup. However, the court also found “The District’s charge of depreciation to the operation and maintenance account on…