A new state law could allow San Diego to resume giving discounts to people who use less water, a move city officials say is crucial to encouraging conservation.
San Diego is being forced to stop giving such discounts by a controversial court ruling, but the new law might allow the city to revive those discounts sometime in 2028 or 2029 — or possibly even sooner.
The court ruling says San Diego’s tiered rates — lower rates for low-volume users and higher rates for high-volume users — aren’t legally justified because the city can’t prove it’s cheaper to serve low-volume customers.
The ruling is having a major impact across California by casting doubt on the rate structures of all water agencies that reward conservation — nearly every water agency in the state.
The new law, AB 2180, aims to erase that doubt and allow tiered rates by making it much easier for water agencies to justify those rates — and the discounts for low-volume users those rates include.
Instead of being required to come up with precise, property-by-property cost measurements that water agencies call nearly impossible, AB 2180 establishes a much lower standard.
The law, signed by Gov. Gavin Newsom on Sept. 27, allows tiers to be based on ordinary customer characteristics like the size of their property, how many toilets and showers they have, and peak-demand estimates.
The law comes as San Diego is scheduled to switch from tiered rates to uniform rates on Jan. 1 to comply with the ruling by an appellate court, in Patz v. City of San Diego.
The ruling resolves a class-action case dating back to 2015, where some high-volume users in the city filed suit alleging that the higher rates they were paying are not justified.
Because the appellate court ruled against the city and the state Supreme Court decided not to consider overturning it, the City Council is scheduled to vote Oct. 27 on eliminating tiered rates in San Diego.
The vote was postponed from Tuesday because three of the council’s nine members — Marni von Wilpert, Stephen Whitburn and Sean Elo-Rivera — missed the meeting.
Council President Joe LaCava said water rate hikes are too important to decide with only six members.
“The constituents they serve all represent different viewpoints of San Diego and I think it’s important that all three of them — or as much as we can get together — weigh in and that we have a healthy and robust discussion on water rates,” LaCava said Tuesday.
During Tuesday’s meeting, environmental groups and consumer organizations lobbied the council to embrace AB 2180 and try to revive tiered rates as soon as possible.
“The legal and legislative landscape has shifted,” said Courtney Brown, a staff attorney for nonprofit Coastkeeper. “The city now has a faster, lower-risk path back to conservation-based pricing. We’re asking the city to use it.”
The San Diego Bird Alliance agreed.
“A uniform tier system doesn’t reward conservation the way that it should,” said Andrew Meyer, conservation director for the alliance. “The Bird Alliance hopes the council adopts the unitary rate as explicitly temporary with a mandatory review clause so we can get back to a system where if you use less water you pay less.”
The Utility Consumers Action Network urged the council to launch the complex analysis needed to revive tiered rates as soon as possible.
The city recently completed the lengthy analysis required to switch away from tiered rates because of the court ruling. The city must follow through with those uniform rates before reviving tiered rates.
Those rates stick with a 14% overall hike on Jan. 1 that the council approved last year. But they shift how much of that will fall on each class of customers.
The shift to uniform rates would mean low-volume single-family homes bear 7.1% more of the burden than under tiered rates. Average-volume single-family homes would bear 5.9% more and high-volume single-family homes would bear 5.9% less.
Irrigation customers would bear 6.7% less and customers in apartment and condominium buildings would also see savings: 2.2% for smaller buildings and 2.6% for larger buildings.
In addition to shifting to uniform rates, the city agreed to pay the plaintiffs in the class a total of $40 million.
Those affected customers have been receiving mail recently asking them whether they want to opt in or out of the settlement.
“The process for final approval is underway to allow class members to opt out or object,” City Attorney Heather Ferbert said in a Monday letter to the council.
Decisions must be made by Nov. 12.
AB 2180 was written by Assemblymember Chris Ward, D-San Diego.
“AB 2180 gives local water agencies clearer rules to responsibly set rates while maintaining strong protections for ratepayers,” Ward said.
The legislation was supported by water agencies across the state. It was opposed by the Howard Jarvis Taxpayers Association, the California Taxpayers Association, the California Apartment Association and the California Association of Realtors.