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Parsing San Juan Capistrano’s tiered water pricing 'straightjacket' ruling

WALNUT CREEK, CA - APRIL 07:  East Bay Municipal Utility District (EBMUD) water conservation technician Rachel Garza (L)  inspects a water meter with home owner Michael Shain as she performs a water conservation audit of a home on April 7, 2015 in Walnut Creek, California.  As California enters its fourth year of severe drought, EBMUD and water districts throughout the state are assisting customers with finding ways to reduce water use at their homes. California residents are facing a mandatory 25 percent reduction in water use.  (Photo by Justin Sullivan/Getty Images)
Justin Sullivan/Getty Images
East Bay Municipal Utility District (EBMUD) water conservation technician Rachel Garza (L) inspects a water meter with home owner Michael Shain as she performs a water conservation audit of a home on April 7, 2015 in Walnut Creek, California.

Many local water districts' rate structures were dealt a blow yesterday by a state appellate court decision.

Many local water districts' rate structures were dealt a blow yesterday by a state appellate court decision.

It ruled that San Juan Capistrano's tiered pricing was illegal.  The agency might have to refund millions of dollars.  Tiered pricing allows lower usage customers to pay less per unit than higher users. As a resident uses more water, the cost of the additional water increases - kicking customers into higher tiers as they go.

Although the court said tiered pricing isn't illegal, the tiers have to be justified by the actual cost of the water to the district.  Simply setting the tiers up as penalties for heavy water users don't comply with the law.

The impact extends far outside the south Orange County city. Governor Brown called the ruling a straightjacket on local government at a time when maximum flexibility is needed. How will water districts respond?

Read more here

Guests:

Sanjay Gaur, Senior Manager, Raftelis Financial Consultants, a utility consulting firm

John Perry, Co-founder of the Capistrano Taxpayers Association, which was the plaintiff in this Tiered Pricing lawsuit. Perry is also a City Councilmember

Tim Quinn, Director of the Association of California Water Agencies (ACWA), which filed an amicus brief on behalf of the appellant, the City of San Juan Capistrano

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