City of San Diego water customers’ bills will look different under a proposed change to the rate structure, which is the result of a class action lawsuit over how rates are determined. If approved by the City Council, the City will move from a tiered rate to a unitary rate beginning Jan. 1, 2027.

The change will only affect how bills are calculated. Water quality, reliability and customer service will stay the same for the City’s 1.4 million residents.

The City currently uses a tiered water rate structure, where customers who use more water pay a higher per-unit rate on the additional water used. This tiered structure was developed based on nationally accepted American Water Works Association cost-of-service principles and methodologies that are used by utilities throughout California and the country.

To comply with a recent court decision, the City is changing to a unitary rate structure, where all customers pay the same rate per unit of water, regardless of total use. The court decision found that the national standard methodologies as used by the City did not satisfy Prop 218’s evidentiary burden.

Tiered rates have historically been used by water districts across California.

Why is the rate structure change happening?

A 2025 court decision (Patz v. City of San Diego) requires the City to change how water rates are structured. To comply with the court order, the City is moving to a unitary rate structure. This change impacts water agencies across the state, not just San Diego.

The rate change must be approved by the San Diego City Council in order to take effect. A public hearing is scheduled on Oct. 6, 2026, for the Council to consider and vote on the proposed rate adjustment. The hearing begins at 2 p.m. in Council Chambers at 202 C St., 12th floor, San Diego, CA 92101.

If approved, San Diego customers would see the new rate structure reflected in their water bills beginning on Jan. 1, 2027.

Impacts to customers’ bills will vary depending on how much water they use, their property type and water meter size. Details of the proposed changes to volumetric rates and service charges can be found at sandiego.gov/rate-adjustments and in the notice of public hearing mailed to customers.

The City is not collecting more money under the new rate structure. Unitary rates only change the distribution of who pays what, they do not increase revenue for the City.

More information on the proposed changes to the rate structure can be found at sandiego.gov/rate-adjustments.