Restoring Tiered Rates for the SLVWD

The San Lorenzo Valley Water District currently charges its customers in direct proportion to the amount of water they use. In contrast, so called “tiered” water rates impose higher per unit charges for higher levels of water use. This promotes both water conservation (by making excessive water consumption disproportionately costly) and equitable access (by allowing the wealthiest and/or most profligate users to shoulder an appropriately larger share of the cost burden as compared to customers restricting their water consumption to only their basic needs).

Until 2015, tiered water rates were the norm for SLVWD and across California. This unexpectedly changed when a state court ruled that Proposition 218 (passed in 1996) effectively prohibited the routine use of tiered water rates (although it did leave the door still partially ajar). In the wake of this ruling, many California water districts (including SLVWD) reverted to a flat rate pricing structure. Certain other districts, though, were not so quick to abandon their preferred approach. For example, both Santa Cruz and Scotts Valley were able to devise legal strategies to preserve the use of tiered rates.

This topic is worth revisiting today because the SLVWD budget for the 2021-2022 fiscal year includes funding for a rate study (as a necessary prerequisite for potential pending rate changes). The default plan is to maintain the District’s current flat rate structure, but the tiered rates in neighboring communities suggest that this assumption may be premature. FSLVW believes that the responsible course of action for the District is to require the upcoming rate study to include a thorough assessment of the benefits and challenges of restoring a tiered rate structure for the SLVWD. We have prepared a white paper in which we seek to briefly identify the key issues that should be addressed.

Studying the Restoration of Tiered Water Rates for the SLVWD

The above document was submitted to the SLVWD Board of Directors on July 30, 2021.