California Courts of Appeal

By Matt Stevens
April 14, 2015

An appellate court ruling due by next week could put a glitch in plans to reach Gov. Jerry Brown’s goal of slashing urban water use by 25% statewide.

When Brown announced on April 1 his historic order to cut water use from 2013 levels, he told water agencies to use pricing structures that encourage conservation. In other words, he directed them to charge higher rates to people who use the most water.

But those kinds of rate structures are under fire in a San Juan Capistrano case that could affect water districts statewide. State law prohibits water agencies from charging more for water than the cost of producing and delivering it. A group of San Juan Capistrano residents has challenged the city’s tiered rate structure, arguing that it resulted in arbitrarily high fees.

About two-thirds of California water agencies already use some type of tiered structure, and the Los Angeles Department of Water and Power is considering expanding its tiers, charging even more for high use.

An appeals court is expected to issue a decision in the case this week. If the court publishes its opinion, water lawyers say the decision could have major implications for agencies that use or are considering adopting tiered rates.

Stephanie Pincetl, director of the California Center for Sustainable Communities at UCLA, is among several experts who say tiered water rates are crucial to conservation. Rates are likely to increase no matter how the San Juan Capistrano case is decided, she said, and tiered rates are a more equitable way to charge for water use.

What are tiered rate structures and who uses them?

At least two-thirds of California water districts use some form of a tiered rate structure. Those programs usually charge less for low usage and progressively more as use increases. The city of San Juan Capistrano’s 2010 rate schedule, the one being challenged in court, charged customers $2.47 per unit of water in the first tier and up to $9.05 per unit in the fourth. The Los Angeles Department of Water and Power also employs a tiered rate structure, but it has only two tiers separated by less than $2 in price.

About a third of California’s urban water districts use flat rate structures that charge customers the same amount for each unit — 748 gallons — of water used. Typically under those structures, customers are charged the same amount no matter how much water they use.

Experts say steep tiers encourage customers to keep their water use — and their bills — low.

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