Legal Considerations

Agencies in California have to consider a variety of legal requirements when setting up, implementing, and during the ongoing billing of water rates. Some of these legal considerations are discussed below. Another legal matter relates to privately owned water agencies that are regulated by the California Public Utilities Commission (CPUC). VWC is the currently the only contributor that is privately owned. Some of the specific requirements are addressed in Valencia Water Company in Setting a Water Budget

Proposition 218

Submitted by IRWD

Rate-setting and any adjustments, including changes to tiers and allocations, involves a rigorous analytical process to determine cost of service, appropriate cost allocations, and proposed rates. Once that analytical process is complete, agencies are required to comply with all of the requirements of Proposition 218, including customer notification of the proposed rates changes and public hearings.

Proposition 218 is one of the major recent legal decisions that all rate structure have to adhere to. It added Article XIII C
http://www.leginfo.ca.gov/.const/.article_13C and Article XIII D http://www.leginfo.ca.gov/.const/.article_13D to the California Constitution after approval on November 5, 1996. Proposition 218 was affirmed to apply to water rates in the 2006 decision on Bighorn-Desert View Water Agency v. Verjil.

Proposition 218 requires that a water agency mail out information regarding any proposed rate changes to all property owners at least 45 days in advance of a public hearing and provide an opportunity for property owners to submit a protest. At the public hearing customer ballots are tabulated and the rate change may only be implemented if less than 50% of property owners submit a protest. Any drought water rate and excess use charge that imposes a charge on each unit of water consumed is subject to the requirements of Proposition 218.

IRWD initiated its rate-setting process for Fiscal Year 2015-16 in January 2015 and conducted the analysis and modeling, which included adjustments to allocations and tiers to reduce potable demands, in March and April 2015. A public workshop was held in April, with approval of the proposed changes and associated Proposition 218 notices. Proposition 218 notices were mailed to all customers in May and the public hearing to review the responses and to adopt the rates and allocation changes was held on June 22, 2015. Proposition 218 notices for IRWD and other agencies are included in the Library: Outreach Repository¬Ľ