Falls Church is accusing Fairfax County of a power grab in a long-running water war whose spoils could include millions of dollars supplying service to new developments in Tysons Corner and Merrifield.

After Fairfax took a step toward making its water utility the sole provider for parts of the county and setting rates for all county residents — including customers of municipal utilities, such as Falls Church’s — the city accused the county of trying to build a monopoly through Fairfax Water.

“We think the business community in Tysons Corner and Merrifield likes having a choice between water providers,” Falls Church Mayor Nader Baroukh said in a written statement. “Establishing Fairfax Water as the exclusive water provider would take that choice away for the business community.”

For years, Falls Church and surrounding Fairfax County have been at odds over water, and City Manager Wyatt Shields suggested that the county’s aggressive stance could put the jurisdictions on a collision course for another legal battle.

Fairfax, Shields said, appears to be acting on the theory that counties have the power to regulate municipal utilities. “It would not withstand a legal challenge,” Shields said. Creating an exclusive zone of service also conflicts with the consent decree that ended a previous lawsuit between Fairfax Water and Falls Church, he said.

But County Board Chairman Sharon S. Bulova (D) said that Fairfax is acting to protect its residents. “It’s not a power grab,” she said. “We’re looking out for our constituents who are being gouged by Falls Church water rates. It’s not fair, and we’re going to fix it.”

Fairfax County’s Consumer Protection Commission found that under Falls Church’s new rates, which went into effect Saturday, a typical county resident will pay $62.13 per quarter — about 60 percent more — than the $38.76 charged by Fairfax Water for the same amount of water.

The commission suggested that the board fix rates in Fairfax so that no resident would pay more than the rate set by Fairfax Water — unless Falls Church, or another municipal provider in the county, could demonstrate why a higher rate would be necessary. The commission also recommended that for future development, Fairfax Water be designated the exclusive water supplier unless the authority is unable to provide service to a particular location.

Last Tuesday, county supervisors directed staff to examine ways to enact the commission’s recommendations, setting the stage for an ordinance this year — and all but ensuring that the conflict will continue.

“Whiskey is for drinking; water is for fighting,” said Supervisor Penelope A. Gross (D-Mason), paraphrasing Mark Twain.

The dispute’s origins arise from the City of Falls Church’s treatment of about 100,000 customers who live in Fairfax County but receive water from the city. Most water service elsewhere in the county is supplied by the Fairfax Water Authority, whose members are appointed by the Board of Supervisors.

In years past, Falls Church billed customers above cost and transferred the surplus revenue to its general fund. From 1981 to 2008, Falls Church directed more than $58 million in surplus revenue to its coffers — a practice that city officials say is common among municipal utilities.

The practice came to a halt in January 2010, when Fairfax County Circuit Court Judge R. Terrence Ney ruled that Falls Church was imposing an unconstitutional tax on county residents. His order also prohibited Falls Church from collecting profits on its water.

Although the city has complied with the court’s order, its top officials have defended the practice, saying that most municipal utilities return excess revenue to their general funds because its taxpayers guaranteed the bonds that financed the water utility.

The latest flare-up came after Falls Church sought to boost its water rates by 30 percent over the next five years. The Consumer Protection Commission questioned the rate increases, including an 8 percent increase adopted by the Falls Church City Council this month.

The commission concluded that Falls Church undercharges new hookups to win new customers and expand its territory, but then overcharges existing customers to pay for the costs associated with new service. The commission also said that Falls Church’s lack of cooperation hindered its ability to understand how the city calculated its new rates.

Shields denied that the city has set artificially low hookup rates to lure customers such as Tysons Corner developers. “Our availability fees are set to fully cover our expansion to meet new development, and we’re careful about that,” Shields said.

The city manager also said that soon after learning that the commission would be looking into Falls Church’s rates, he contacted county officials and offered to cooperate. But then the commission handed the city 58 questions that would have cost the city’s consultant at least $70,000 to answer them, Shields said.