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 public utilities.

(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 service area.

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 public purposes.

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 reclamation plant.
  (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.