Council sets Oct. 6 hearing to implement court-ordered shift to unitary water rates

The San Diego City Council voted Tuesday to accept a staff memorandum and set a public hearing on Oct. 6 to consider a required shift to a unitary volumetric water rate structure after the Patz litigation.

Public Utilities Interim Director Lisa Celaya told the council the change is driven by court decisions that found the city’s tiered single-family residential rates did not meet Proposition 218’s evidentiary standard. “We are not asking for more money,” Celaya said; instead, the changes reallocate who pays so total revenue remains what the council previously authorized. Staff estimated the shift would raise bills for low-volume single-family customers by about $5.62 per month on average while reducing high-volume single-family bills by about $19.52 per month.

City staff also said the city is expected to pay an approximately $40 million settlement associated with the litigation; staff intend to absorb the immediate impact without asking for an additional revenue increase this year, but noted some capital projects may be deferred and that the settlement and refunds will be handled within the water utility fund. Jordan Moore of the Independent Budget Analyst’s office confirmed the noticed rate adjustments will not increase the overall revenue requirement beyond what council previously adopted.

Councilmembers pressed staff on technical differences between slides that showed volumetric-only changes and those that included fixed charges; staff explained slide 9 focused on volumetric rates while slide 10 showed total-bill impacts including fixed charges. Several members framed the court ruling as constraining local authority to use tiered pricing as a conservation tool and called for Sacramento advocacy to address the broader legal framework.

After extended questioning about distributional impacts and outreach plans, the council voted 7–1 to set the hearing and accept the memorandum, with Councilmember Foster dissenting. Staff said Proposition 218 notices will be mailed in late July to approximately 286,000 customers and translated into 10 languages; the outreach package will include FAQs and an explainer video.