Streamline - Summer 2011 - (Page 26)
Litigation & Water Wars
IT HAS OFTEN
BY CARL BROWN, PRESIDENT GETTINGGREATRATES.COM
been said that for a two-car accident to happen, both drivers had to lose focus for the same moment. Unlike car crashes, the “moments” that lead up to a lawsuit over water issues usually take years. Yet, those lawsuits still surprise us. Amazing! Ten years ago a water district purchased its water from “Watertown.” (This story is based upon actual events that have been fictionalized to protect the litigants.) A group in that region decided to look into forming a wholesale supply system to bolster water supplies. The district and Watertown participated. The wholesale system was finally formed a few years ago. The district joined. Watertown did not. Being sued sucks! Wallow in it today if you must, then get over it. Your job as a decision-maker or manager of the system is not to cry over the awfulness of being sued. It is to find the best way through this new landscape for the benefit of your ratepayers. The district switched to buying most of its water from the wholesale system. Watertown then sued the district for breach of contract. You are probably thinking, “The district broke the agreement. It deserved to be sued.” Maybe – but there is a twist. The written agreement nowhere mentioned any commitment to buy. The agreement only covered how water was to be priced if it was sold. But the judge ruled that the district must continue past practices, too. That included purchasing substantial volumes from Watertown; their historical practice. Then he sent everyone away with instructions to work it out. This story has three main points: 1. You can’t always predict outcomes, even if the “rules of the game” are written out in plain English. 2. If you want to continue functioning after the “bad” thing happens, you need to avoid the pity party, reassess and find a good way forward. 3. Your ratepayers judge everything by how it affects their service and rates. You should make decisions, even legal ones, on that same basis. You should be wondering: • Why did Watertown not insist on rewriting the agreement to include a required purchase volume once it was clear competition was coming in? Scratch that. Why wasn’t it in there in the first place? • Why did the district not have a discussion with Watertown about its intent to jump ship before doing it? • Most important, are there landmines in my system’s contracts and practices? Back to the story, there was another twist. Before the lawsuit popped onto the district’s radar screen it had committed, in writing, to purchase the majority of its water from the wholesale system. Some of the district’s water purchases were now double-committed. Point No. 1 is history. It’s time to move on to points 2 and 3. With the encouragement of their attorneys, the district and Watertown entered into legal mediation to resolve the dispute and write a new supply agreement. To weigh settlement options subjectively each party needed to analyze the rate effects of each proposal. That was accomplished with analyses for both systems that projected their finances, rates and more, importantly including payments to be made by the district to Watertown. Another model linked these analyses together. Table 1, a depiction of the money part of the final settlement, includes elements of that model.
26 S T R E A M L I N E • S u m m e r 2 0 1 1
Table of Contents for the Digital Edition of Streamline - Summer 2011
From the President
From the Executive Director
The Water Tastes Good in Western Virginia
Virginia WARN, Help in an Emergency
Proper Disposal of Pharmacy Products
VELAP: Where Are We Now?
Why Did the Paramecium Cross the Road?
Anger in the Work Place: What It Really Costs You
Litigation and Water Wars
Hydrant Flow Testing–Data You Need
What A Ride!
Conference 2011 Highlights
Throwing My Loop
Do You Know What Your VRWA Benefits Are?
New VRWA Benefit
Welcoming New Members
Board Of Directors
Index To Advertisers/ Ad.Com
Streamline - Summer 2011