FAQs • Tustin, CA • CivicEngage

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Water Rate Increase

1. I heard water rates changed in Tustin. Can you explain this to me?

As of February 1, 2020, the City of Tustin moved to a fixed-rate fee system from a tiered-rate system. This means all customers will be charged the same flat fee of $2.79 for each unit of water (748 gallons) used regardless of how much water is consumed. Since 2014, Tustin’s unit cost has ranged from $0.84 to $4.05 per unit depending on amount of usage (i.e. tiered system). On each January 1 over the next four years (2021-2024), the new unit cost of $2.79 will increase by 5 percent as part of this five-year rate plan.

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3. Did flat fees for meter sizes change, too?: Yes. In almost all cases – except for high-capacity water users (6”, 8” and 10” meters) – the fixed flat rate charged for meter size was reduced. This ultimately helps initially offset the increase in the unit of water cost. For instance, the average residential customer’s bi-monthly fixed meter charge was $46.85 under the old model whereas the new bi-monthly fixed meter charge is $39.76.

4. Why did water rates increase?

There are several factors that affect water rates, including the cost of buying water; the cost of electricity to move water from place to place; the cost to fund water improvement projects for the City’s 50-year-old aging water system; and the cost to enhance emergency preparedness. Water costs alone have increased by 17% for imported water and 66% for groundwater in recent years. Costs for electricity, labor and construction have increased, too.

Since the City had not examined its overall costs since 2010, it was time to evaluate them and recalibrate rates to accurately account for the service delivery. Furthermore, the City is legally required to divide the cost of delivering water evenly across all users, which is why it changed from a tiered-rate model to a flat-fee model.

The recent water study also found the City’s current revenue would not meet financial needs in the future. As a result, the water rates were changed to reflect the cost of delivering water to our customers and to ensure the City can continue to invest in a secure water future.

While it is not uncommon for water agencies in California to increase rates each year, the City of Tustin has not increased its rates since 2014.

5. How are water rates determined?: Water rates are developed through a comprehensive cost-of-service study that examines the water rates to the actual cost of providing water service. To determine the appropriate rate structure for Tustin, the City’s water rate consultant, Raftelis Financial Consultants, reviewed the current rate structure and consumption data along with ongoing operational, maintenance, capital and bond obligations to determine the new rate structure approach.

6. How was the public notified of the increase?: The rate increase was introduced on September 17, 2019 at a publicly noticed Tustin City Council Meeting. Customers also received direct-mail information about the potential rate increase in November 2019 and December 2019. A public hearing on the issue was held on January 21, 2020, where the rate increase was officially approved.

7. How often are water rates increased?

The City last examined its overall water delivery cost in 2010. At that time, a modest fee increase was approved for a five-year period. The last water rate increase was on July 1, 2014. No other changes have been made since that time, until now. It is not uncommon for water agencies in California to increase rates each year.

8. What is the incentive to conserve now that the tiered-rate structure is gone?

Conservation incentives are still in place since those who use less water will be charged less for usage. Conversely, those who use more water will inevitably have higher bills. Therefore, there is a built-in incentive to use less water if you wish to save money on your water bill.

9. How is my water payment used?: Since general fund tax dollars are not used to pay for the City’s water delivery, all proceeds from water bills go directly to fund the water delivery operation. This includes maintaining various critical water infrastructure like water mainline replacements and maintenance; well replacements and maintenance; treatment plant operations and maintenance; hydrant maintenance; backflow compliance; and meter maintenance. The City of Tustin’s water distribution system consists of 172 miles of water mains, six reservoirs, 14 active wells and 1,945 fire hydrants.

10. What is Proposition (Prop) 218?: Prop 218, passed by voters in California in 1996, specifies the required process for public participation in water rate setting that water agencies like Tustin must follow. Prop 218 requires that a public hearing take place when the City proposes to increase water service rates or establish new rates. The law’s intent is to ensure that rates and fees are reasonable and proportional to the cost of providing service.

11. Why did the City move from a tiered-rate approach to a fixed-rate approach?: The City is required to keep pace with the cost of delivering water to its 69,000 customers. California law requires that cities know their cost to delivery water and divide it evenly across all ratepayers.

12. What can I do if I can’t pay my bill?: The City is committed to helping customers who are struggling economically as a result of the COVID-19 pandemic. The Tustin City Council proclaimed a local emergency on March 20, 2020, which states that the City will not assess late fees or shut off water if customers are unable to pay their bill during the next 90 days, or until the City Council terminates the local emergency, whichever comes first. Furthermore, the City is working with customers to arrange payment plans if needed. Please call 714-573-3075 if you would like to discuss a payment plan for your bill.