Chapter 8.5. Service Duplication of California Public Utilities Code >> Division 1. >> Part 1. >> Chapter 8.5.
The Legislature recognizes the substantial obligation
undertaken by a privately owned public utility which is franchised
under the Constitution or by a certificate of public convenience and
necessity to provide water service in that the utility must provide
facilities to meet the present and prospective needs of those in its
service area who may request service. At the same time, the rates
that may be charged for water service by a regulated utility are
fixed by the Public Utilities Commission at levels which assume that
the facilities so installed will remain used and useful in the
operation of the utility for a period of time measured by the
physical life of such facilities.
The Legislature finds and declares that the potential loss of
value of such facilities which may result from the construction and
operation by a political subdivision of similar or duplicating
facilities in the service area of such a private utility often deters
such private utility from obtaining a certificate or extending its
facilities to provide in many areas a water supply essential to the
health and safety of the citizens thereof.
The Legislature further finds and declares that it is necessary
for the public health, safety, and welfare that privately owned
public utilities regulated by the state be compensated for damages
that they may suffer by reason of political subdivisions extending
their facilities into the service areas of such privately owned
(a) As used in this chapter, "political subdivision" means a
county, city and county, city, municipal water district, county water
district, irrigation district, public utility district, California
water district, or any other public corporation.
(b) As used in this chapter, "service area" means an area served
by a privately owned public utility in which the facilities have been
dedicated to public use and in which territory the utility is
required to render service to the public.
(c) As used in this chapter, "operating system" means an
integrated water system for the supply of water to a service area of
a privately owned public utility.
(d) As used in this chapter, "private utility" means a privately
owned public utility providing a water service.
(e) As used in this chapter, "type of service" means, among other
things, domestic, commercial, industrial, fire protection, wholesale,
or irrigation service.
(f) As used in this chapter, "reclaimed water" means reclaimed
water as defined in Section 13050 of the Water Code.
(g) As used in this chapter, "private use" means an entity's use
of its own reclaimed water.
The Legislature finds and declares that whenever a political
subdivision constructs facilities to provide or extend water service,
or provides or extends such service, to any service area of a
private utility with the same type of service, such an act
constitutes a taking of the property of the private utility for a
public purpose to the extent that the private utility is injured by
reason of any of its property employed in providing the water service
being made inoperative, reduced in value or rendered useless to the
private utility for the purpose of providing water service to the
Just compensation for the property so taken for public
purposes shall be as may be mutually agreed by the political
subdivision and the private utility or as ascertained and fixed by a
court of competent jurisdiction pursuant to the laws of this state
relating to eminent domain, including consideration of the useful
value to the political subdivision of the property so taken.
Whenever the compensation by a political subdivision under this
section is an amount equal to the just compensation value of all the
property of the private utility in the operating system that the
private utility employs in providing water service to the service
area, the political subdivision may, by resolution, provide for the
acquisition of all such property.
A political subdivision engaged in activities set forth in Section
1503 shall pay just compensation for the property so taken for
The provisions of Sections 1503 and 1504 will be applicable
to any private utility which constructs facilities to provide or
extend water service or provides or extends such service to any
territory theretofore served by a political subdivision with the same
type of service.
The provisions of Sections 1503 and 1504 will be applicable
to any political subdivision which constructs facilities to provide
or extend water service or provides or extends such service to any
territory theretofore actually being lawfully served by any other
political subdivision with facilities designed and constructed to
provide the same type of service. The provisions of this section
shall not apply to any territory, or portion thereof, which is the
subject of any final judgment or litigation pending on the effective
date of this section involving any duplication of water service
occurring prior to the effective date of this section.
(a) As used in this chapter, "private utility" includes a
mutual water company. In its application to mutual water companies,
this chapter affects and relates only to the property, or portion of
any property, of a mutual water company that is employed by the
company in providing water service in or for a territory that is
actually being provided with water service by the company when a
political subdivision constructs facilities to provide or extend
water service or provides or extends the service to the territory,
and that territory shall constitute the "service area" of a mutual
water company as used in Section 1502.
(b) Subject to the preservation of rights of a mutual water
company in subdivision (c), this section does not apply to a
political subdivision that constructs facilities to provide or extend
recycled water service to the territory of the mutual water company,
if the political subdivision complies with the Water Recycling Act
of 1991 (Chapter 7.5 (commencing with Section 13575) of Division 7 of
the Water Code).
(c) The exception in subdivision (b), for a political subdivision
that constructs facilities to provide or extend recycled water
service to the territory of the mutual water company, does not apply
to those customers and their properties to which the mutual water
company was providing recycled water service, or for whom the mutual
water company has identified and developed specific plans to provide
recycled water service, as of December 31, 2014.
This chapter shall not be applicable if all of the following
conditions are met:
(a) The use is limited to the private use of reclaimed water by an
entity that owns a water reclamation plant.
(b) The use is limited to the premises of a water reclamation
plant or landfill owned by the entity that owns or operates the water
(c) The use is limited to dust suppression, and irrigation
purposes, and other uses on the site for which reclaimed water has
been approved by the State Department of Health Services.
(d) No existing reclaimed water facilities, whether owned or
operated by a private utility or political subdivision, can
reasonably and economically serve the intended use.
(e) If reclaimed water is used on the premises of a landfill, the
entity provides appropriate compensation to the private utility or
political subdivision for those facilities directly used for the
water services being replaced by reclaimed water service. Appropriate
compensation shall not include valuations based on revenues lost by
the private utility or political subdivision due to replacement of
water service with reclaimed water.
(f) This section shall apply only in Los Angeles County.