San Diego's City Council voted 6-2 to scrap its tiered water-rate system, approving a new structure that will raise bills for low-volume households while cutting costs for high-volume homes, apartments and irrigation customers starting Jan. 1, 2027. The change reverses decades of rate design meant to reward conservation, and city leaders say they had no real choice given a court ruling that found the old system legally indefensible.
Under the new unitary rate structure, all customers will pay the same amount per gallon regardless of how much water they use or what kind of building they live in, according to KPBS. The shift is designed to bring San Diego into compliance with Proposition 218's requirement that rates be proportional to the actual cost of providing service, the outlet reported. An appellate court had already determined that the city's old tiered rates — which charged less for low-volume users and more for high-volume users — were not legally justified because San Diego could not prove that serving low-volume customers actually costs less, as the San Diego Union-Tribune reported.
The overall 14.5% rate increase for 2027 was actually approved by the council last fall, but the new vote redivides that hike so it lands unevenly across customer types. Low-volume water users will now pay $5.62 more per month than previously expected, a 7.1% increase, while medium-volume users will see bills rise $7.72 per month, a 5.9% increase, according to NBC San Diego.
Big Users and Apartments Come Out Ahead
High-volume single-family homes will see the opposite effect, receiving a $19.52 monthly discount, a nearly 6% decrease, per the same NBC San Diego report. Apartments and condo buildings with roughly 10 units will get a $15.17 monthly reduction, or 2.2%, while larger complexes of around 250 units will see savings of $353.52 per month, or 2.6%, according to the Union-Tribune. Irrigation customers are also set for relief, with a $48 reduction, or 6.7%.
David Garrick, writing for the San Diego Union-Tribune, reported that Councilmember Kent Lee opposed the 14.5% increase, arguing the rates burden people who are barely making ends meet. Lee and Councilmember Henry Foster voted against the new structure, while Councilmember Marni von Wilpert was absent from the vote. Council President Sean Elo-Rivera, who voted in favor, said the court order penalizes conservation and rewards those who ignored conservation efforts.
A New State Law Offers a Maybe, Not a Fix
Assembly Bill 2180, sponsored by local Assemblymember Chris Ward and signed by Gov. Gavin Newsom on Sept. 27, seeks to legalize conservation discounts through tiered water rates statewide by changing the implementation language around Proposition 218. The law allows tiers based on factors such as property size, the number of toilets and showers, and peak-demand estimates, and it lowers the standard for establishing tiered rates, per the Union-Tribune's reporting. But AB 2180 does not eliminate local governments' burden to prove that rates are proportional to the cost of service, according to PublicCEO.
That caveat matters for San Diego. City officials said they must await a ruling from the California Supreme Court before using the new law to revive conservation-rewarding rates, per the Union-Tribune. The case in question, Dreher v. Los Angeles Department of Water and Power, is before the state's high court as a key test of tiered rates — the justices granted review in March 2026 and the matter remains pending, according to PublicCEO. The court requested supplemental briefing on Sept. 30 specifically on how AB 2180 should apply to that case.
San Diego Public Utilities Director Lisa Celaya said the city wants to see the Dreher outcome before reintroducing tiered rates, and that San Diego does not plan to revive them before 2030. Councilmember Joe LaCava endorsed that approach as legally prudent. Advocacy group Coastkeeper had lobbied the city to explore reviving tiered rates as soon as possible under AB 2180, pushing for a faster timeline than officials ultimately embraced.
What Comes Next for Rates and Relief
The Dreher case carries weight beyond Los Angeles. A Court of Appeal decision in that case upheld LADWP's budget-based tiered water rates for single-dwelling customers, and in doing so expressly rejected the reasoning used in Patz v. City of San Diego and a related Otay Water District case, according to a legal analysis from BBK Law. California courts, in other words, have not landed on one consistent answer for how cities can structure water rates — and NBC San Diego has noted the San Diego case could carry implications well beyond city limits, since most California communities rely on similar tiered systems.
San Diego is meanwhile conducting a comprehensive rate analysis covering 2028 and 2029, expected to be completed in February, that could eventually factor conservation pricing back into the equation. City officials also agreed to explore a subsidy program for low-income customers hit hardest by the rate increase, to be funded through revenue sources other than water rates, including public utilities land leases and solar panels on city facilities.
The rate changes affect roughly 286,000 customers across San Diego, Coronado, Imperial Beach and Del Mar. The city received 3,644 protests against the new rates — far short of the roughly 50% threshold that would have been needed to block them. The vote also lands just before the Nov. 3 election, in which Lee, Foster and von Wilpert are the only council members with races on the ballot.
