December 13, 2016 -- Client Alert
Existing law authorizes any public entity that supplies water (retail or wholesale) to adopt and enforce a water conservation program, via ordinance or resolution. This alert provides an update on recent legislation that requires urban retail water suppliers to actively discourage overuse of water through a new or amended ordinance, rule, or tariff condition.
Senate Bill No. 814
On August 29, 2016, the Governor signed Senate Bill 814 (SB 814), which adds Chapter 3.3 to Division 1 of the Water Code. Under SB 814, during specified periods, excessive water use by a residential customer in a single-family residence, or by a customer in a multi-unit housing complex, is prohibited. Each urban retail water supplier is required to establish a method to identify and discourage excessive water use, through one of the following methods:
(1) Establish a rate structure that includes block tiers, water budgets, or rate surcharges over and above base rates for excessive water use by a residential water customer, subject to the California Constitution, Constitutional case law and statutes.
(2) Establish or amend an excessive water use ordinance, rule, or tariff condition that includes a definition or a procedure to identify and address excessive water use by metered single-family residential customers and customers in multi-unit housing complexes in which each unit is individually metered or submetered. It may include a process to issue written warnings to a customer and perform a site audit of customer water usage before deeming the customer in violation. The urban retail water supplier may consider factors that include: (a) average daily use; (b) full-time occupancy of households; (c) amount of landscaped land on a property; (d) rate of evapotranspiration, and (e) seasonal weather changes.
Violation of an agency’s rules will result in an infraction or monetary civil penalty. A fine imposed under the new law is added to the customer’s water bill. Each supplier must have a process for customer nonpayment and appeal, similar to the procedure for nonpayment of a water bill.
Tiered Retail Rates Must Comply with Proposition 218 Case Law
Palmdale v. Palmdale Water District found a tiered rate structure that treated different classes of users differently based on considerations other than cost of service improper under Proposition 218. (Palmdale v. Palmdale Water District (2011) 198 Cal.App.4th 926.)
Similarly, in Capistrano Taxpayers Ass’n, Inc. v. City of San Juan Capistrano, the Court of Appeal held, in setting tiered rates, an agency could not simply use a rate multiplier that was unrelated to the costs of service for different tiers. (Capistrano Taxpayers Ass’n, Inc. v. City of San Juan Capistrano (2015) 235 Cal.App.4th 1493, 1497.) An agency must correlate its tiered prices with the actual cost of providing water at those tiered levels. Our summary of Capistrano can be found at http://awattorneys.com/news/tiered-water-rates-and-proposition-218-capistrano-taxpayers-ass%E2%80%99n-inc-v-city-san-juan.
Note: California’s conservation mandates do not eliminate a public agency’s obligation to meet all of the requirements of an exception to Proposition 26’s election requirement for charges by a local government. For a summary of recent law on exceptions to Proposition 26, see http://awattorneys.com/news/wholesale-rates-and-proposition-26-newhall-county-water-district-v-castaic-lake-water-agency.
For further information, please contact your Aleshire & Wynder attorney or Christine Carson from Aleshire & Wynder, LLP’s Water Law Practice Group at (949) 223-1170.
Disclaimer: Aleshire & Wynder, LLP legal alerts are not intended as legal advice. Additional facts or future developments may affect subjects contained herein. Please seek legal advice before acting or relying upon any information in this communication.