Assemblymember Ward Introduces AB 2180 to Clarify Water Rate Setting Under Proposition 218

• Anthony Reyes
• (916) 319-2078
• [email protected]

SACRAMENTO, CA - Assemblymember Chris Ward (D-San Diego) introduced Assembly Bill (AB) 2180, a measure aimed at providing clarity and legal certainty for local water agencies when setting rates under Proposition 218 (1996). AB 2180 updates the Proposition 218 Omnibus Implementation Act to clarify how local agencies can demonstrate that water and sewer rates are proportional to the cost of providing service, as required by the California Constitution.

"Water agencies need clear rules to responsibly manage essential public infrastructure," said Assemblymember Ward. "AB 2180 ensures that water rates remain fair, proportional, and legally sound, while giving agencies practical tools to fund critical operations and improvements."

Proposition 218 requires that property-related fees not exceed the proportional cost of service attributable to each parcel. In recent years, however, appellate courts have issued conflicting rulings on how to interpret that proportionality requirement, creating uncertainty for both local agencies and the ratepayers they serve.

Cases such as Coziahr v. Otay Water District(2024) and Patz v. City of San Diego(2025) adopted rigid interpretations that would require impractical levels of precision in tracing water supply costs to individual parcels. By contrast, the December 2025 decision in Dreher v. City of Los Angeles Department of Water and Powersupported a more practical framework for allocating costs in tiered water rate structures.

AB 2180 clarifies that local agencies may use reasonable methodologies to allocate service costs among parcels and may establish uniform or tiered water rates based on shared customer characteristics. The bill affirms that agencies may assign higher supply and infrastructure costs to higher usage tiers without requiring water to be traced from specific sources to individual parcels, and allows reliance on projected data and systemwide peak demand factors when allocating costs. At the same time, the legislation preserves the core constitutional requirement that rates not exceed the proportional cost of service.

By clarifying allowable cost-allocation methodologies, the bill helps ensure that low-use customers are not subsidizing infrastructure costs driven by high-use demand. It also ensures that agencies can continue investing in water reliability, storage, and supply diversification; and ensures that rate structures are legally defensible and transparent.

The Association of California Water Agencies, sponsor's of the bill write in support "AB 2180 to bring critical clarity and consistency to how public water agencies comply with Proposition 218. This legislation would provide a reasonable framework that will help public agencies set constitutionally sound water rates and continue providing safe, reliable water service to their communities."