A lawsuit in San Juan Capistrano could change the way customers California-wide pay for water.
The suit alleges San Juan Capistrano's tiered water-rate structure violates state law, the Los Angeles Times reported Thursday.
Under tiered systems, the more water a customer uses, the higher the rate. It's a strategy water districts employ to encourage conservation.
A group of taxpayers argue the tiered structure violates Proposition 218, a 1996 state law that prohibits agencies from charging customers more than the "cost of service" provided.
A lower court decided in their favor, and an appeals court is expected to rule soon.
The residents argue that San Juan Capistrano charged arbitrary fees — especially in the highest tiers. The city's 2010 rate schedule charged customers $2.47 per unit — 748 gallons — of water in the first tier and up to $9.05 per unit in the fourth, the newspaper said.
The city charged customers who used the most water more than the actual cost to deliver it, plaintiffs said.
"People were getting nailed," said John Perry, a 79-year-old resident who helped create the taxpayer group. "They were having $500 or $600 water bills on Tier 2 and Tier 3. There were horror stories."
At least two-thirds of California's water providers, including the city of San Diego, use some form of the tiered rates that are at issue in the lawsuit, consultants and water lawyers said.
A 2014 study at the University of California, Riverside, estimated that tiered rate structures similar to the one used in San Juan Capistrano reduce water use over time by up to 15 percent.
A state superior court judge declared the city's rate structure invalid in 2013. The city has flattened its tiers and tied charges more directly to water costs while it awaits a decision by the state's 4th District Court of Appeal.
If the appellate court publishes an opinion upholding the previous ruling, many Californians could see changes to their bills either immediately, or during their water agency's next rate-making cycle, lawyers said. Agencies could flatten their tiers, adopt uniform rates or simply wait to see if they get sued, they said.
