Water and wastewater companies gained an vital new safety from lawsuits difficult their charges on Wednesday, when Governor Newsom signed SB 323 (Caballero). For water or sewer service charges or costs adopted after January 1, 2022, this new regulation requires any lawsuits difficult these charges or costs to be commenced inside 120 days of the efficient date. Water and sewer companies for years have been uncovered to lawsuits introduced as much as a decade after their charges have been adopted, resulting in an absence of budgetary certainty and inserting extraordinary and dear strain on water and wastewater companies to change their charges in gentle of the ever-changing requirements articulated by appellate courts evaluating different companies’ fee approaches.
The regulation additionally requires challenges to be introduced by means of a reverse validation motion, a authorized course of mostly used to problem bond and different debt issuances. That is the very process the Legislature created to assist guarantee certainty in municipal funds, and so applies naturally to make sure certainty in companies’ future income. Certainly, fuel and electrical fee challenges are already topic to validation, as are “connection” or “capability” charges imposed by utilities. SB 323 makes the validation statutes relevant equally throughout all of those utility sectors and costs. In consequence, whereas companies can merely look ahead to this new statute of limitations to run out and validate their charges by operation of regulation, in addition they have the choice to take the initiative and affirmatively pursue validation in courtroom instantly after adopting charges, probably creating even larger certainty.
To benefit from the protections offered by SB 323, retail water and wastewater companies should embody of their proposed fee enhance discover an announcement that there’s a 120-day statute of limitations to problem any new, elevated, or prolonged charge or cost.
Underneath Proposition 218, enacted in 1996, and subsequent laws and courtroom choices, most water and wastewater charges and costs are already ruled by strict and complicated guidelines that require every ratepayer’s cost to be restricted to its proportional price of service. Challengers typically sue after the charges go into impact, with out ever notifying the company previous to its adopting the speed change. Challengers additionally typically search attorneys’ charges, or a proportion of the challenged quantities, if their fits are profitable. That monetary incentive has led “bounty hunter” attorneys to problem the charges of assorted companies, typically even promoting for potential purchasers on social media. Public companies—and their ratepayers—in the end pay these prices. Public companies don’t make a revenue, so all quantities paid to bounty hunter attorneys—and the prices to defend their lawsuits—in the end come from the ratepayers themselves.
SB 323 doesn’t apply to billing errors or overbilling; these claims should be introduced below the usual route below the Authorities Claims Act or Income and Taxation Code.
The invoice was put ahead by the Affiliation of California Water Companies, and co-sponsored by a broad coalition of public infrastructure associations and public companies.