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This week in… Water Rates
Last week, the 4th District Court of Appeal ruled that the tiered water rates used by the City of San Juan Capistrano are unconstitutional. The court found that the city’s rate structure did not reflect the cost of service, a requirement of Proposition 218, a law passed in 1996 that prohibits any fees or charges imposed on property owners from exceeding the individual’s proportional cost of service.
While the ruling does not outlaw tiered pricing, it could stimulate lawsuits against utilities whose rate structure is believed to be out of compliance with Prop 218. At the very least, utilities with tiered rates will start looking closely at their structure to be sure they are in compliance with the law.
Tiered pricing – where the cost per unit of water increases as use increases – has been shown to be an effective mechanism for encouraging conservation and efficiency, particularly when the cost per unit in the higher tiers is significantly more than the lower tiers. As a result, the flattening of rate structures to bring utilities into compliance with the law could weaken the strength of that conservation signal.
Currently, two-thirds of California utilities employ tiered rates for their residential customers.
In other news…
- This Tuesday, Governor Brown proposed new legislation that will provide utilities with increased enforcement authorities to help them meet the water reductions required by the Governor’s most recent Executive Order.
- Also as a result of Brown’s Executive Order, the California Energy Commission approved stricter standards for water appliances and fixtures.
- The State Water Resources Control Board continues to issue curtailment orders to water rights holders in various regions of the state. The latest orders were issued to junior rights holders in the San Joaquin and Scott River watersheds.
California Drought Status
Drought conditions have slightly worsened from two weeks ago, with 47% of the state now in “exceptional drought.” This is an increase from 44%.
Average precipitation for the water year (which begins October 1st) is still at or below normal for most of the state.
Statewide, California’s major reservoirs (representing 27.3 million acre-feet of storage) are at 46% of capacity and 61% of group average.
Hydroelectric power generation in January and February 2015 was, respectively, 5% and 22% higher than 2014. Still, generation in both months was less than half of the 2003-2013 average.