California Supreme Court Reverses State’s 2020 Order on Water Surcharges

California’s Supreme Court has reversed a 2020 order by the state’s Public Utilities Commission that barred water company surcharges on customers during drought-related conservation efforts, saying the notice was unclear. To encourage water conservation and reduce the financial incentive to sell more water, California’s Public Utilities Commission in 2008 allowed water companies to impose a surcharge on their customers when they face a revenue shortfall because of efforts to conserve water in droughts. According to the five affected water companies, the Public Utilities Commission eliminated the surcharges, known as “decoupling mechanisms” or “revenue adjustment mechanisms,” without adequate notice in 2020. However, the Public Utilities Commission argued in its response that the water companies were made aware during the process. At the same time, the commission claims the decoupling mechanisms could be abused in situations such as a rainy year, when customers require less water for landscaping, or during an economic downturn, when people conserve water....