Tiered rates are a highly effective way to nudge water customers to conserve. While some wealthy homeowners will maintain green lawns and cascading water fountains no matter the cost, most of us pay close attention when our water bills start creeping up and react accordingly.
But the legality of tiered rates — which penalize heavy water users by charging them more per unit once they pass a certain threshold — was called into question this week when a state appellate court ruled against San Juan Capistrano’s rate structure. The court decided that the city’s tiered rates violate Proposition 218, a voter-approved ballot measure that prohibits governments from charging more for a service than it costs to provide.
That doesn’t necessarily mean that governments have to throw out their tiered rate structures. As long as they can demonstrate that higher rates are tied to the cost of providing water, they are OK.
San Luis Obispo County agencies contacted by The Tribune believe they can justify their tiered rate structures. That’s reassuring, though at the very least, cities and other government water providers will likely have to jump through more hoops to justify higher rates for big water users and could become more likely targets for lawsuits.
Meanwhile, how’s this for a contradiction? Private companies that sell water are free to charge higher rates to encourage conservation.
We agree there should be limits on what governments can charge to provide services. Otherwise, agencies in need of an infusion of cash could arbitrarily raise rates for everything from reserving campsites to requesting copies of police reports, regardless of what it costs to provide those services.
But when it comes to water, government providers aren’t merely providing a delivery service. They also are responsible for ensuring a reliable supply, and every water study we’ve ever seen points to conservation as the least costly way to do that.
By encouraging customers to use less water, tiered rates can spare a community from having to turn to much more costly sources, such as desalination.
Conservation is an effective strategy that pays off for everyone in the long run. Tiered rates may well be the single most important incentive to foster water savings, and without them the drought could take an even bigger toll.