Newport to pay back $433,000 to four recycled-water customers for overcharges
Two country clubs, a school district and a church that said they were overcharged for recycled water will receive more than $433,000 in refunds from Newport Beach under settlement agreements approved by the City Council on Tuesday.
The city will pay $222,770 to Big Canyon Country Club. Newport Beach Country Club will receive $190,179 and Our Lady Queen of Angels Catholic Church will be reimbursed $7,769. Newport-Mesa Unified School District, which has its main office in Costa Mesa but operates schools in Newport Beach, will receive $12,395 for recycled water use at Eastbluff Elementary School.
The refunds will be provided within 15 days.
The council approved the agreements on a 6 to 0 vote during a closed session. Councilman Keith Curry was absent.
Big Canyon Country Club alleged in a claim filed with the city in March that it was overcharged from 2011 to 2014 while the city was conducting a study that led to a decrease in water rates last year.
Recycled water, also known as reclaimed water, is treated wastewater used for landscape irrigation at parks, school fields, roadway medians and often at places with expansive greenery, such as golf courses. The water — which should not be consumed — is used as a way to conserve drinking water.
Newport-Mesa Unified, Newport Beach Country Club and Our Lady Queen of Angels also were granted refunds after Big Canyon submitted its claim, according to City Attorney Aaron Harp. “They didn’t file claims, but I believe they were aware of the claim filed by Big Canyon,” Harp said.
A 2014 staff report said the city was the only other recycled-water customer at the time.
“The city reimbursed all of the parties that overpaid for recycled water pursuant to the same formula,” Harp said.
Big Canyon requested in July 2011 that the city conduct an analysis of the cost to provide and transport recycled water to the country club. The analysis by Irvine-based HF&H Consultants took about three years and resulted in the city reducing the price of recycled water to the club by about 50%, according to the claim.
The price of recycled water was lowered for all users citywide in response to the study.
The claim stated that under Proposition 218 – also known as the Right to Vote on Taxes Act – passed by voters in 1996, “the city is restricted from charging more for goods and services it provides than what those goods and services cost.”
“The city’s own analysis established the rate was significantly higher than it should have been,” the claim said.
To calculate the amounts the four customers will receive under the agreements, the city subtracted the water use and fixed rates established in an analysis of the water rate study from the amount paid for water use and fixed charges from the middle of March 2013 to the end of October 2014.
It is unclear how much the four currently pay for recycled water.
Users of recycled water also pay a monthly commodity charge for each meter, which the city says recaptures the cost to purchase recycled water from the Orange County Water District.
