What’s next on water rates?

A court’s rejection of San Juan Capistrano’s tiered rate structure poses problems for the whole state.

It will take some time to fully grasp the consequences of Monday’s court decision rejecting San Juan Capistrano’s tiered rate structure for water. Gov. Jerry Brown said the ruling would make it harder for local governments to encourage conservation, and it does indeed undermine what has proved to be the most effective means of curbing excessive water use. With tiered rates, all users pay a relatively small amount per unit for their basic needs, but as their usage increases they pay not just for more gallons but more per gallon, giving them an increased incentive to make do with less.

The court took pains to say that there is nothing wrong with charging more per unit for delivering a lot of water than for delivering a little; in fact, it said, such a structure seems like “a good idea” — as long as the district can prove that it really is more expensive for government to deliver the millionth gallon than the first. Under the California Constitution, the court said, higher per-unit prices can’t be set randomly or solely for the purpose of encouraging conservation.

So don’t districts merely have to make a better effort than San Juan Capistrano did to show that it costs more to deliver more water? That may be easier said than done. Building out a large water delivery infrastructure is expensive, but once it’s completed, it may actually cost less to deliver the millionth gallon than to deliver the first. A district that has to go to the expensive spot market to buy enough water to meet the demands of guzzlers certainly would be able to pass along higher per-unit costs; but in fact there’s not much of a spot market for water these days.

The state Constitution describes water as a precious natural resource that must not be wasted. But another clause of the same complex, voluminous and sometimes crippling document bars government from charging more for a service than it costs to provide. That leaves California with this perverse result: Private agencies may price water solely to incentivize conservation, but government, which has conservation of water engrafted into its operating framework, may not.

It’s hard to believe this is what the voters had in mind in 1996, when they adopted Proposition 218. That’s the taxpayer protection initiative on which the appeals court based its San Juan Capistrano ruling.

The Constitution can be changed — and court rulings can be overturned, and tiered pricing can be ratified by voters — but by then there may be only enough water left for Californians to raise half a glass in a bittersweet victory toast.