City Proposes Switch to Unitary Water Rate After Court Finds Tiered System Violates Prop 218

San Diego water customers would see a fundamental change in how their bills are calculated under a proposed rate structure heading to the City Council next week.

The city plans to abandon its long-standing tiered water rate system — where heavier users pay progressively higher per-unit rates — in favor of a unitary rate under which every customer pays the same per-unit charge regardless of total consumption.

The change, announced by the city Wednesday, is required by a 2025 Superior Court ruling in Patz v. City of San Diego. The court found that the city's tiered rates, developed using nationally accepted American Water Works Association cost-of-service methodologies used by utilities across California, did not satisfy Proposition 218's evidentiary burden.

"The City is not collecting more money under the new rate structure," the city stated. "Unitary rates only change the distribution of who pays what, they do not increase revenue for the City."

However, the redistribution could produce winners and losers. Customers who currently use little water — and benefit from the lowest tier — may see increases, while high-volume users who pay top-tier rates could see reductions. The city acknowledged impacts will "vary depending on how much water they use, their property type and water meter size."

The San Diego City Council will hold a public hearing on the proposed rate adjustment Monday, Oct. 6, at 2 p.m. in Council Chambers at 202 C Street, 12th floor. If approved, the new unitary rate would appear on bills beginning Jan. 1, 2027, affecting the city's approximately 1.4 million water customers.

Details of the proposed volumetric rates and service charges are available at sandiego.gov/rate-adjustments. The city has also mailed notices to customers.

The tiered-rate model has been the standard approach for California water agencies seeking to encourage conservation. The Patz ruling raises questions about whether other agencies across the state using similar methodologies will face similar legal challenges.