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Alameda County Flood Control v. Department of Water Resources

ELR Citation: 43 ELR 20038
Nos. C065522, (Cal. Ct. App. 3d Dist., 02/15/2013)

A California appellate court upheld the California Department of Water Resources' (DWR's) method for crediting State Water Project (SWP) water recipients with revenues from hydropower generated at the Oroville Dam. DWR purchases the hydropower for use within the SWP, but some of it is pooled with other SWP system power and traded or resold on the open market. A number of water districts claimed that the term "total revenues" as used in the SWP contract required valuing Oroville power at market rates. But DWR acted within its statutory authority in the manner in which it treated profits due to resales of Oroville power. In 1967, DWR signed a 50-year agreeing to sell power—evidently at then-current market rates—to several utilities. Later, DWR took over that contract, in effect paying itself what the utilities had been paying to DWR, and DWR was statutorily authorized to continue making to itself the payments that the utilities had previously made. And given that DWR has administrated the contract in this way for 20 years without challenge, any arguable contractual ambiguity regarding this treatment is properly resolved against the districts by the practical construction rule.