The anticipated rate restructuring of the Valley of the Moon Water District was approved by its Board of Directors on Jan. 2.
But the moment did not pass without considerable public comment – much of it negative – from a larger-than-usual audience of rate-payers and stakeholders.
There was even exasperation expressed by board members themselves.
Water district board chair Jon Foreman said that, in light of recent court rulings elsewhere in the state, the district had no choice but to restructure its rate system.
“The board, in its frustration at prevailing laws, specifically the San Juan Capistrano lawsuit, felt ‘handcuffed’ to obey the law while still trying to protect our historically low rates, especially for our lower income customers,” said Foreman.
In the wake of the vote, however, the board decided to form a Citizens Advocacy Group to help carry the fight to Sacramento, where legislation is pending that might provide legal cover for higher rates or penalties for customers who use excessive water.
“This Group will work with local Assembly members and Senators and other water agencies to hopefully find a statewide fix that will return flexibility to the local level to have more control over conservation-oriented rates, rather than current limitations (resulting) from the San Juan Capistrano case,” said District General Manager Daniel Muelrath.
The rate change – which eliminates rate tiers that reward low water users and penalizes high water users to incentivize conservation – was required by a 2015 court decision in San Juan Capistrano. In brief, the ruling said customers could not be billed for service charges they did not vote on, ruling it an illegal taxation under Proposition 218.
Muelrath said it was “a serious threat of litigation” that forced VOMWD to propose the rate change. “If (litigation) were to happen it will cost the District and our rate payers hundreds of thousands of dollars in attorney fees,” said Muelrath, as well as a second rate study for up to $70,000 more.
“Moving against our four-tier structure goes against VOMWD staff’s ethos, which was the cause of many spirited debates,” said Muelrath. “However, at the end of the day, the best way to protect our customers was to avoid this class-action lawsuit.”
Muelrath said the San Juan Capistrano decision “turned the industry on its head,” and put many water districts state-wide at risk of lawsuits. This includes the City of Sonoma, which is also evaluating its water rate structure in response to the San Juan Capistrano decision.
There have been several attempts to legislate a solution at the state level that would allow incentives or penalties to water rate users to avoid the San Juan Capistrano quagmire. One was a constitutional amendment offered by state Sen. Robert Hertzberg (D-Van Nuys), and another a bill, SB 623, introduced by Senate Majority Leader Bill Monning (D-Santa Cruz).
Muelrath outlined two potential fixes to the conundrum. Since the state has set a maximum threshold for per-capita water use for all districts – for the VOMWD, it’s 124 gallons per day – the district might be allowed to charge customers an excess fee or penalty when their use exceeds that amount. Another option would be to allow water retailers to apply a simple surcharge on higher users, but both solutions would require legislative action.