Group files suit over Glendale’s tiered water rates

Glendale’s water rates are arbitrary and illegal, a group of residents claims in a lawsuit, alleging current fees aren’t backed by research and fall outside state regulations.

The complaint, filed in January by the Glendale Coalition for Better Government, says charges for four categories of customers, including single-family home and multifamily residents, fail to comply with a state law that requires prices to be in line with the cost of providing the water.

The consulting firm that designed the rate structure, however, argues the rates are fair and legally sound. In addition to generating millions in needed reserves for Glendale Water & Power, Bartle Wells Associates says the structure promotes conservation.

The tiered system, approved last year by the Glendale City Council, bases rate on consumption. The more you use, the more you pay.

Currently, single-family homes pay $2.27 per 100 cubic feet for the first six such units, a total of 748 gallons. Once a home goes past that, residents are charged $2.80 for the next six 100-cubic-foot units, $3.18 for the next 13 units past that point, and $3.86 per unit for any usage above 2,500 cubic feet of water.

Harry Zavos, one of the coalition’s board members, said that type of breakdown violates Proposition 218 because the law mandates fees shall not exceed the proportional cost of the service.

“If [customers] are charged differently, it has to be based on the fact that there’s an empirical basis for differential costs of providing that water,” he said.

Zavos argues that the 600-cubic-foot level shouldn’t be the peaking factor for single-family homeowners, but rather, based on his own calculations, 1,800 cubic feet. That figure, he says, represents the average monthly use.

Under current rates, a single-family home customer would be charged $49.50 for 1,800 cubic feet of water. If the lowest-tier rate stayed in effect until 1,800 cubic feet were used, that amount would drop to $40.86, a savings of $8.64 per family, per month.

City officials, however, say the analysis by Bartle Wells Associates comprehensively shows how the water rates match up to the cost of getting water to users’ taps.

City Atty. Mike Garcia said the approach does not violate state law regarding water rates.

“We feel comfortable and confident that our study allocates costs that are proportional,” he said.

In a lengthy report presented to the council last year when the tiers and rates were being considered, the firm noted the system was designed with several aims in mind, including compliance with Proposition 218, funding the utility’s long-term costs of providing service and providing a balance between keeping revenue stable and giving incentives for conservation.

The rate increases, phased in during a four-year period, amount to about $4.4 million in utility reserves by 2018.

A successful suit in Orange County has agencies around the state scrambling regarding tiered rates.

Late last month, a state appellate court upheld a decision ruling that San Juan Capistrano’s tiered water rates violate Proposition 218, and ordered the Orange County city to revise them.

But Garcia said Glendale will have a better chance at defending its rate structure.

“Our record is significantly better,” he said. “Our study was done using proper methodology.”

The lawsuit is the second legal action the coalition has taken against the city.

In 2014, the same group filed a complaint claiming the annual transfer of millions of dollars from electrical-rate revenues to the city’s general fund is illegal unless the funds are coming from a surplus.

About $80 million has been transferred in the past five years, which the coalition wants returned to Glendale Water & Power. The group claims the transfers amount to a hidden tax, artificially inflating utility rates.

The city has said the practice was approved by local voters in the 1940s.

City Manager Scott Ochoa said the matter will likely be resolved in court sometime this summer and, if the city loses, the absence of a transfer would be a $20-million loss to the general fund.

At that point, he said the council would have to consider whether to hold a special election asking voters if they would be willing to pay more, for example, for utility users tax rates or some other form of special assessment.