The Metropolitan District has settled a rate payer suit with an agreement to spend about $5.8 million to reimburse thousands of suburban homeowners who paid inflated water bills for years because the regional water and sewer authority imposed what courts have called a succession of improper surcharges.

The 9,000 affected water customers in East Granby, Farmington, Glastonbury and South Windsor will have water bills credited for about 78 percent of the amounts they were overcharged, according to the terms of the settlement of the class action suit against the authority.

The MDC agreed to fully reimburse affected customers with interest. But the distribution to rate payers decreased by a quarter when costs were deducted for class lawyers Izard, Kindall & Raabe of West Hartford - $1,913,240.77 in attorney fees and $6,759.23 for expenses.

The lawyers said they are prevented by terms of the settlement for discussing it.

There is a chance the settlement could be further eroded if authority has to raise rates to cover the costs of litigation.

“We are at the early stages of our 2021 budget process,” Christopher R. Stone, the district’s counsel, said. “The 2021 water rates may be affected by the settlement, but its too early to know definitively on this and if so, to what extent. We are looking at other potential revenue sources to offset any impact on rates.”

The East Granby, Farmington, Glastonbury and South Windsor customers claimed in the suit that they were over billed through the succession of surcharges between 2006 and 2014. Those customers buy water from the MDC, but live in towns that are not member towns of the authority.

The MDC had argued that it is entitled to impose surcharges in nonmember towns because, unlike member towns, they do not contribute to the upkeep of the regional water and sewer infrastructure. Ratepayers in the affected towns complained that they were paying for capital improvements that benefited customers elsewhere in the MDC network.

After the complaints, the MDC reduced the surcharge and the state legislature, which created the regional water and sewer authority and controls its operations by statute, enacted a law to limit surcharges on nonmembers. The legislature also gave the nonmember towns seats on the MDC board.

Glastonbury sued over the charges. The MDC contended the legislature’s actions made the suit moot, but the commission lost the argument and, eventually the case. The state Supreme Court found for Glastonbury in 2018, calling the surcharges illegal and concluding that the MDC lacked authority to impose them.

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