In accordance with Article XIII D of the California Constitution (Proposition 218) and applicable State law, the District conducted a cost-of-service study to ensure that proposed water rates do not exceed the funds required to provide water service and are proportionate to the cost of service attributable to each customer class. The study identifies projected operating and capital costs; allocates costs as fixed, variable, or fire-flow related; and, establishes the basis for customer service charges, commodity (usage-based) rates, and private fire line charges. The full cost-of-service study is available here:

2026 Rate Study and Analysis Report

The Board of Directors proposes to adopt water rate adjustments for a five-year period. If approved, the first adjustment would take effect July 1, 2026, and appear on bills beginning September 1, 2026.  Additional adjustments would take effect July 1 of each year from 2027 through 2030. Upon adoption, the scheduled adjustments for years two through five would take effect without further rate hearings, provided they do not exceed the amounts noticed herein. The District retains discretion to adopt rates lower than those proposed.

The District purchases imported water from the Municipal Water District of Orange County (MWDOC) and, upon completion of the planned groundwater well, from the Orange County Water District (OCWD). Imported water supply costs are a direct component of the District’s commodity rate. Current financial projections assume average annual imported water rate increases of approximately 7 percent to over 14 percent from MWDOC over the next five years and 5 percent or more from OCWD. These projected increases are incorporated into the proposed commodity charges.

If MWDOC or OCWD adopt water rate increases exceeding current projections, the District may implement a pass-through adjustment. Any pass-through adjustment would apply only to the Tier 1 commodity charge, could be authorized through June 2031, and would require at least 30 days advance notice. The District also retains the discretion to impose a lower rate.

The District uses a two-tier, budget-based rate structure to reflect the actual cost of delivering water given the unique characteristics of each parcel. Tier 1 covers typical, efficient indoor and outdoor needs within a customer’s water budget. Tier 2 applies to use above that allocation and reflects the higher costs the District incurs to implement water-use efficiency programs designed to reduce Tier 2 water use and increase supply for all customers.

Your water budget is determined based on your account classification. Single-family residential customers are allocated water budgets based on indoor and outdoor water use as described in the graphic below. Current water budgets for hotels and motels are set based on a gallons-per-room-per-day consumption allocation. Water budget allocations for commercial, school, multi usage, and government accounts are based on a 3-year rolling average of use at the property. Water budgets for irrigation only accounts are set according to the property’s total square footage of irrigated area, evapotranspiration rate, plant factor, and irrigation efficiency.

The District is updating its water budget formula to reduce indoor use from 55 to 47 gallons per capita per day, consistent with new state indoor-use mandates (California Code of Regulations, Title 23, section 966), and updating its historical weather data.

California law allows tiered water rates as long as each tier is tied to the cost of providing service at that level of use. The District’s cost-of-service analysis demonstrates that Tier 1 reflects the cost of meeting everyday needs, while Tier 2 reflects the higher costs associated with demand above that level. Because the tiers are based on documented cost differences, not penalties or revenue generation, the District’s tiered rates comply with Proposition 218 and current California court decisions.

Customers are billed on a bi-monthly basis (six billing cycles per year). Each bill includes a fixed service charge, and a commodity charge based on the quantity of water used during the billing period.

Click on the image below to see a Sample Bill Statement.

The following table shows how the proposed rate changes affect the water commodity charge. This charge covers the cost associated with supplying and delivering water and is based on the amount of water recorded by each customer’s meter. One unit of water equals 748 gallons, or 100 cubic feet (HCF).

The following table shows how the proposed water rate recommendations affect the bi-monthly Service Charge for water customers. The District’s service charge is levied against all customers in the District on a bi-monthly basis based on the size of each meter on the customer’s premises. The charge recovers costs associated with providing water to the serviced property, which do not vary with consumption. These costs include maintenance of meters and service lines in the distribution system, water quality testing, meter reading and customer billing, administrative costs, and labor.

The following table shows the proposed bi-monthly private fire line service charge for properties with a separate fire protection line. The charge applies only to properties with a private fire line and is based on the size of the fire service lateral, reflecting the cost associated with providing water for fire protection.

Beginning this year, the District is changing how a portion of certain charges are collected by shifting them from the regular water bill to the County property tax roll. Placing capital and long-term water reliability costs on the property tax roll spreads expenses over time instead of funding them through current water rates. This aligns costs with long-term benefits and ensures future beneficiaries share in the investment. Additionally, this approach reduces administrative costs, improves collection consistency, and helps keep overall water rates more stable.

The amount collected will be a fixed cost charge per connection, approved annually by the District’s Board of Directors in accordance with Health and Safety Code section 5473 et seq., ensuring transparency and public oversight. These charges will appear as a separate line item on the annual property tax bill and will continue to fund the same services they do today.

Notice is hereby given that the District has filed a report describing each parcel for which the charges described herein are proposed for collection on the property tax roll, and the amount to be collected for Fiscal Year 2026-27. The District will hold a public hearing on the question of whether to collect these charges on the tax roll immediately after the public hearing on adoption of the proposed rates, should the Board determine to adopt the rates described as follows: