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California appeals court rules San Juan Capistrano's tiered water rates unconstitutional

Post Date:04/20/2015

The ruling upholds an Orange County judge's decision that found that charging the biggest water users higher rates violates a law voters approved in 1996 that prohibits government agencies from charging more than the costs of actual service.  San Juan Capistrano charged almost four times as much per unit of water for the highest users, to encourage conservation.

“The water agency here did not try to calculate the cost of actually providing water at its various tier levels,” the three judges wrote in the unanimous ruling.  “It merely allocated all its costs among the price tier levels, based not on costs, but on predetermined usage budgets.”  The court ruled that the City of San Juan Capistrano did not do enough to show that its pricing structure, which was based on different classes of customers, reflected the costs of providing water service.  Vallecitos Water District is reviewing its tiered pricing structure to confirm that it meets the legal requirements.  The Vallecitos rates are based on a cost of service study and are consistent across all customer types and monthly units (HCF) per tier are established by meter size.  

Vallecitos Water District’s General Manager, Dennis O. Lamb, noted that the District, as well as other California water agencies, will continue to monitor the court action, to see if San Juan Capistrano chooses to appeal the current ruling to a higher court.

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