Santa Margarita Water District (SMWD) officials on Monday expressed confidence in its rate structure after an appellate court panel ruled that the City of San Juan Capistrano’s tiered rates were in violation of the state Constitution.
SMWD adjusted its rates in March. In keeping with the requirements of Prop. 218, SMWD exhaustively analyzed SMWD’s costs and directly linked those costs to the rates paid by customers.
The ruling was specific to the City of San Juan Capistrano and upheld a lower court ruling. On Monday, justices with the Fourth District Court of Appeal, Division Three, ruled that while tiered rates were in fact legal, the City of San Juan Capistrano erred when it did not directly link its tiered increases to the actual costs of providing the water. Proposition 218 of the State Constitution mandates the costs agencies charge for a service must be directly linked to the cost of providing that service. Simply put, the courts found that the City of San Juan Capistrano failed to do that.
Tiered rates are an effective tool in water efficiency.
SMWD will continue to study the court’s ruling in the City of San Juan Capistrano case for any potential impact on District operations.
Santa Margarita Water District is the second-largest in Orange County, serving more than 165,000 people in Coto de Caza, Ladera, Rancho Santa Margarita and portions of Mission Viejo and San Clemente.