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Drought Advisory: State Water Board Solicits Comments on “Conservation Water Pricing”

Governor Brown’s April 1, 2015 executive order addressing California’s historic drought directed the State Water Resources Control Board to take steps to require urban water suppliers to develop pricing mechanisms to maximize water conservation.  The Water Board did not address this directive in its emergency water conservation regulations, which it adopted on May 5, 2015.  On June 10, the Water Board issued a notice of a July 8, 2015 workshop to solicit public input on the actions that the Water Board could take to implement the directive.

Directive 8 indicates that:

The Water Board shall direct urban water suppliers to develop rate structures and other pricing mechanisms, including but not limited to surcharges, fees, and penalties, to maximize water conservation consistent with statewide water restrictions. The Water Board is directed to adopt emergency regulations, as it deems necessary, pursuant to Water Code section 1058.5 to implement this directive. The Water Board is further directed to work with state agencies and water suppliers to identify mechanisms that would encourage and facilitate the adoption of rate structures and other pricing mechanisms that promote water conservation.

After the Governor issued his executive order, the Fourth District Court of Appeals issued its decision in Capistrano Taxpayers Association, Inc. v. City of San Juan Capistrano (G048969) holding that the City of San Juan Capistrano’s tiered water rate structure designed to encourage water conservation violated the proportionality requirement of Proposition 218 because the rates did not reflect the costs of service to the tiers.  The Water Board has requested that the California Supreme Court depublish the case.

In its request for public comment, the Water Board specifically acknowledges the challenges that Proposition 218 poses to public-agency water purveyors attempting to implement conservation pricing. The Water Board seeks information on the financial, technical, political, and legal challenges associated with changing rates, surcharges, and other fees, on the efficacy of conservation pricing, and on proposals for how conservation price signals can be improved consistent with Proposition 218.  It specifically requests input on the following questions:

  1. What actions should the State Water Board take to support the development of conservation pricing by water suppliers that have not yet developed conservation rate structures and pricing mechanisms?
  2. What actions should the State Water Board take to support water suppliers that have already developed conservation rate structures and pricing mechanisms to improve their effectiveness?
  3. What actions can the State Water Board take to assist water suppliers in demonstrating that existing rate structures harmonize competing legal authorities associated with water rates?

Comments are due by noon on Wednesday, July, 1, 2015.

The Water Board has also developed a useful page on its website devoted to the topic of conservation water pricing.  It includes links to research on the efficacy of conservation pricing, literature on justifying rate structures, and examples of conservation pricing.

Meyers Nave’s Multidisciplinary Drought Response Team: Our Drought Response Team is available to assist clients interested in commenting or otherwise interested in conservation pricing issues and compliance with Proposition 218. For nearly three decades, Meyers Nave has assisted public and private clients confronted with complex regulatory and legal challenges. California’s historic drought is raising the stakes and increasing the complexity of water issues that were difficult in times of normal water supply. The drought has also spurred development of new laws and regulations, including the State Water Resources Control Board’s emergency regulations and the Sustainable Groundwater Management Act. The most creative, effective and practical solutions to these new challenges require the comprehensive expertise of our multidisciplinary Drought Response Team, which consists of attorneys who specialize in all key areas of law including Land Use, Environmental, Litigation, Eminent Domain, Infrastructure Development, Construction, and Public Agency, Contracts and Finance. www.meyersnave.com