A California Court of Appeals ruling -that tiered water rates must correspond to the cost of service- affects public water agencies. But, it does not affect private companies.
This month, the state Public Utilities Commission voted to allow a higher, second tier on the billing of 180,000 people in the Sacramento area.
Evan Jacobs is with the California American Water Company.
'We serve nine different water systems throughout Sacramento County and western Placer County," he says "and we go from Isleton all the way up to Antelope in those different systems."
Jacobs says California American Water believes a second rate will give customers an added incentive to conserve.
The Public Utilities Commission sets water rates for private water companies every three years.
Many public California water agencies have said they were considering tiered rates to penalize people for failing to conserve. Those agencies now say they are considering their remaining options.
The Howard Jarvis Taxpayers Association -one of the plaintiffs in the suit- says the court decision does not put water agencies in a "straight jacket" as Governor Jerry Brown has said.
The suit was intended to force the City of San Juan Capistrano to show a direct correlation between tiered rates and cost of supplying water as mandated under Proposition 218.
Ryan Cogdill is an attorney for Howard Jarvis. He says water agencies can still raise rates and pass on the cost of the drought.
"If there is a water shortage, and the cost of acquiring the necessary water to service all the customers goes up, that is a cost of providing water service. Not only that, it's not simply the cost of purchasing the water, it's also administering the entire program -doing everything possible to accomplish the delivery of water."
The California Appellate Court also ruled a lower court was wrong when it barred public water agencies from passing the costs of capital improvements on to their customers.