Most people who spend some time in San Diego understand that it’s a coastal desert city. “Desert” being the main word here. Because of this understanding, many adjust their behavior into conserving a desert’s most priceless commodity: water.
People take out their green grass and plant cacti and succulents; they don’t wash their car as much; they use less water in their normal day-to-day living and chores. And up to now, those residents who use less water were rewarded by a city of San Diego water rate system in which customers who use less water paid a lower rate, and those who use more water paid more.
Now, all of that is going to change.
A recent court ruling against the city of San Diego and its tiered pricing system has prompted a proposed rate change that would eliminate the city’s tiered pricing system.
Which means, if enacted, San Diego residents who use less water could see their monthly water bills increase next year and those who don’t use less water will actually see a decrease in their monthly bills. If approved, all customers would pay the same rate, regardless of how much water they use.
Sounds crazy, doesn’t it?
Where would the incentive to save water go?
And critics of the proposed changes malign the idea as just one more cost being heaped on the average consumer. One Kensington homeowner, Cynthia Hillman was quoted by local TV station 7SanDiego as saying the potential increase comes at a difficult time for many families.
“For somebody who’s having to pay higher gas prices, higher grocery prices, this is just one more thing that makes life very uncomfortable,” she said. She also expressed concern about who would bear the added cost. “You’re asking the little guy to pay more,” she said.
Kensington resident Connie Kirk also was quoted: “That doesn’t sound very fair because if they’re using more that means they’ve got more property, which probably means they’ve got more income period.”
Rag readers have also expressed outrage.
The proposed changes stem from a legal decision in a case against the city of San Diego that requires the city to move away from a rate structure that incentivizes lower water usage.
Here’s background on the court case (get ready for some legalese):
Fourth District Court of Appeal Rejects City of San Diego’s Methodology for Tiered Rates
On July 30, 2025, the California Fourth District Court of Appeal rendered its opinion in Patz v. City of San Diego, which affirmed the lower court’s decision that the City of San Diego’s tiered water service rate structure for water users violates Proposition 218’s proportionality requirement.
California voters enacted Proposition 218 in 1996, which added articles XIII C and XIII D to the State’s Constitution to provide procedural and substantive limitations to affect how public agencies levy and collect existing and future taxes, assessments, and property-related fees and charges. Article XIII D, section 6(b)(3) of the Constitution (“Section 6(b)(3)”), provides that public agencies implementing property-related fees “shall not exceed the proportional cost of the service attributable to the parcel.” The burden is therefore on public agencies to justify the proportionality of the cost of service. …
Patz v. City of San Diego Background
The plaintiffs represented a class of single-family residential customers in the City. Patz filed a class action alleging that the City’s tiered water rates, imposed between 2014 and 2022, violated Proposition 218 by charging them more than the proportional cost of providing water service to their properties.
For single-family residential customers, the City adopted a tiered rate structure. The tiered rate structure required customers to pay higher rates per unit of water based on “peaking factors.” “Peaking factors” are multipliers used to estimate the additional costs a water system incurs to meet higher levels of demand during peak usage periods. The City justified its use of peaking factors due to conservation efforts and the general assumption that higher costs were associated with greater water consumption. Such assumptions were gleaned from an industry-accepted manual (known as the AWWA MI Manual).
The City did not collect time-of-use data or conduct parcel-specific studies to support its allocation of costs to each usage tier. Under the City’s tiered rate structure, non-residential customers, including commercial, industrial, and irrigation users, were charged uniform, flat rates regardless of their consumption levels.
The trial court found that the City’s tiered water rates for single-family residential customers violated Proposition 218 because the City failed to prove that the higher rates charged for increased usage by residential customers reflected the actual, proportional cost of providing water service to those customers.
Fourth District’s Decision: The Court affirmed the trial court’s decision that the City’s tiered rate structure violated Proposition 218. [From an article on the website of a law firm Atkinson et al.]
So, that’s the legal background for the changes.
7SanDiego quotes numbers from the city’s website:
Under city estimates, single-family homes with low water usage would see their monthly bills increase by about 7%, or an average of $5.62 more each month. Meanwhile, single-family homes with high water usage would see their monthly bills decrease by nearly 6%, saving an average of $19.52 per month.
What’s Next?
Right now the city council is on summer break. And it is scheduled to hear public comment before voting on the proposal on Oct. 6. If approved, the new rates would take effect in January.
Because most California communities use similar tiered water rate systems, the San Diego case could have broader implications across the state.
The city has set up a website to alert residents to the proposed changes, and plans to mail notices about the proposed changes to more than a quarter-million customers later this month.
This is from website:
Proposed Rate Changes Coming to Your Water Bill in 2027
The Court’s decision in Patz, et al. v. City of San Diego, 113 Cal. App. 5th 225 (2025), determined that the City’s current rate structure does not adhere to Proposition 218, and ordered the City to establish rates that comply. The City is now required by this court decision to develop and enact a unitary volumetric rate and updated fixed charges for all customers, resulting from changes in the approach to the volumetric commodity rates. The details on how these updated rates were developed can be found in the City’s most recent cost-of-service study, and the Water Memorandum Modifying the 2025 Water Cost of Service Study (Stantec Memo),….
To enact the unitary rate structure, the City has proposed a new rate structure, that San Diego customers will see reflected in their water bill beginning on Jan. 1, 2027. This new rate structure will impact how water rates are calculated, but not the service level or water quality you receive. We understand that changes to your bill matter, and we are committed to keeping you informed every step of the way. The City of San Diego is launching an outreach effort to inform customers and stakeholders throughout the rate setting process.
A public hearing is set for the water rate adjustments that will take effect on Jan. 1, 2027.
Date: Oct. 6, 2026
Time: 2 p.m.
Location: Council Chamber, 202 C St., 12th floor, San Diego, CA 92101
San Diego Is Now Selling Its Water
Another wrinkle in this whole situation is that right now San Diego has so much water, that it’s selling it. From NPR:
Even as California is offering to take less water from the drought-shrunken Colorado River, one of the state’s biggest cities that’s long been the most dependent on it curiously now has excess water to sell.
In a good year, San Diego gets barely 8 inches of rain. And not too long ago, the picturesque coastal city was staring down major water supply shortages. It’s notoriously at the end of the line of the Colorado River “straw,” a good three-hour drive from the shrinking river itself. But today, thanks in part to aggressive water recycling and urban and agricultural conservation programs and a big bet made on salt water, San Diego has a surplus and other thirsty nearby cities and states are eager to tap it.
“I don’t think we can save the Colorado River, but what we’re looking to do is show that there is an opportunity to manage the system in a new way,” says Meena Westford, director of imported water at the San Diego County Water Authority.
It’s very tough to talk right now about how thirsty the Southwest is, what with the massive, massive monsoonal rains flooding Arizona at the moment.
Bottom line, those who don’t use a lot of water intentionally will see their water bills go up. But don’t forget: water conservation is its own reward.
The way they can at least do something to fix this situation is to lower the base fee for a water meter, then raise the price of the water rate. Since 2006 the base fee for the standard meter has gone from $15 a month to curently $31.50. The rate is set to raise to $40.69 in Jan 27 and $45.37 in Jan 2028. That a 300% increase of the fee in 20 years when the inflation rate is 65%. Base fees almost always punish those who conserve.