Water Rates

Much of the City’s water infrastructure has reached or is reaching the end of its functional lifespan, a challenge that is made more urgent due to the impacts of climate change. In response, the Santa Cruz Water Department (SCWD) continues to implement a major infrastructure reinvestment program, with $287 million needed for projects over the next five years.

The new rates would become effective on January 1, 2027.

A single-family household using 5 CCF currently pays $99.48 a month for water service. Under the proposed rates, the household’s monthly water bill is expected to be $112.07.

One CCF equals 100 cubic feet, or approximately 748 gallons.

There are several changes proposed, including the rate structure and the per-unit costs of water including:

• Increase Fixed Revenue Recovery: The proposed readiness-to-serve charges are increasing to recover about 20% of system costs (up from 10%). While still low relative to other water utilities, this improves revenue stability for SCWD, ensuring that essential operations and capital investments remain funded.
• Fixed Revenue Recovery Based on Meter Capacity: Fixed charges are based on meter size using industry-standard meter equivalents. Larger meters have greater potential demand on the system, so they will see larger increases in fixed charges. This approach is consistent with standard industry rate-setting practices.
• Consolidation of Volumetric Rate Components: The proposed rates combine the Quantity Charge, Infrastructure Reinvestment Fee, and Rate Stabilization Fee into one volumetric rate. SCWD will continue to fund capital projects and maintain reserves through its budgeting and reserve policies, but these costs will no longer appear as separate charges on customer bills. This simplifies the bill while maintaining cost-of-service and industry-standard rate-setting practices.
• Two Landscape Irrigation Tiers: The proposed rate structure reduces the number of tiers from three to two for dedicated irrigation users, based on the cost-of-service analysis and customer usage patterns. Most customers stay within their water budgets, resulting in very little usage in the third tier.
• Volumetric Drought Surcharges: During water shortages, mandatory conservation can substantially reduce billed water use and revenue needed for essential operations. Applying drought surcharges per unit ensures that costs are recovered proportionally based on actual water usage.

No. All customers pay the exact same water rates regardless of whether they live inside or outside city limits. The main difference is in the services customers receive. Customers within Santa Cruz city limits receive water, sewer, and refuse services. Most customers outside the city limits, such as in Live Oak, receive water service only.

Yes. The City recognizes water service is vital and shouldn’t be a financial struggle. As the proposed rate changes are considered, affordability is top of mind, and the City offers the Utility Customer Assistance Program (UCAP). Qualified, enrolled Single-Family UCAP customers receive a monthly discount applied directly to their bill, while Multi-Unit UCAP households receive a one-time utility assistance check to help offset a portion of their annual Santa Cruz Municipal Utilities costs. UCAP is available to households that have proof of enrollment in a government assistance program, such as CalFresh or Medi-Cal or in PG&E’s CARE program. For more information about UCAP or to apply, visit santacruzca.gov/ucap or e-mail ucap@santacruzca.gov.

California law (Proposition 218) requires that rates must be based on the cost of providing the service. Each customer group must pay their fair share and can’t be required to pay the costs incurred by another group. The law doesn’t allow for separate rates for individual customers because it would result in some customers subsidizing water service costs for other customers. The UCAP program is not funded by rate revenue.

Rate revenues cover ongoing day-to-day operations, water treatment, system maintenance, and critical capital investments that ensure safe water continues to be available to all customers 24/7/365.

Capital Investments (2022-2026)

Planned Capital Investments (2027-2031)