MONTEREY RATES

INTRODUCTION:

In communities around the world, water utilities set rates to collect the revenue necessary to operate water systems. While this sounds like a simple concept, it can be complex in practice. Here in Monterey, we have dual goals to achieve in our rate design. On the one hand, due to consistent periods of drought, we must send strong rate signals to conserve water through our tiered rate structure. At the same time, we must ensure recovery of infrastructure investments to augment our water supply. We’ve developed this website to provide customers with a more detailed explanation about Monterey’s water rates.

On July 1, 2022 California filed a General Rate Case ("GRC") Application A.22-07-001 covering costs for the years 2024-2026. Due to delay in that decision, the CPUC authorized Interim Rates beginning January 1, 2024 (Advice Letter 1430). Additionally, the January 1, 2024 rates include a 2023 Cost of Capital Trigger Mechanism (Advice Letter 1424) which adjusted rates based on recent interest rates and an Annual Consumption Adjustment Mechanism ("ACAM") (Advice 1425) Letter which adjusted quantity rates based on recent customer class consumption. Once California American Water receives a GRC decision for A.22-07-001, it will implement new rates, and calculate an Interim Rate True-up ("IRTU") which represents the difference between Interim Rates in place as of January 1, 2024 and the GRC rates that should have been in place through the date of the GRC implementation. 

FAQ

What are the key features of the rate design?

• Inclusion of the 2024 interim rates as filed through Advice 1430, the 2023 Cost of Capital Trigger Mechanism as filed through Advice Letter 1424, and the 2024 ACAM as filed through Advice letter 1425.
• Each of these rates took effect January 1, 2024.
• Cost recovery for purchased power costs.
• Cost recovery for the purchased water produced by the Pure Water Monterey recycled water project.

Our community’s current major water supply sources, the Carmel River and the Seaside Basin, are restricted by the State of California and the court. The Carmel River, where the majority of our water has historically come from, simply cannot sustain our community’s use and support the wildlife and other habitat that depend on it.
 
Since 2012, we have collaborated with various agencies to develop the Monterey Peninsula Water Supply Project, which will replace our overreliance on the river with a combination of seawater desalination, recycled water and better managed use and storage of high flow periods on the river.

How does the residential rate plan work?

Rates feature four pricing tiers. The amount of water allowed at each tier is standardized for single family and multi-family residential customers. 

During each billing period, your household water use starts in the first tier, where the price per 100 gallons is the lowest. Each tier has a certain amount of water allocated to it – if you use more water than is allocated to a particular tier, you move to the next higher-priced tier. 

 
What are the new monthly service charges?

The new monthly service charges will be as follows: (Effective January 1, 2024)

The Annual Consumption Adjustment Mechanism: 

The Public Utilities Commission approved an Annual Consumption Adjustment Mechanism (ACAM) for Monterey that will set rates each year based on the previous year’s total water consumption. A timely process for adjusting rates based on actual sales will ensure more efficient revenue collection, which significantly cut down or even eliminate WRAM/MCBA balances. 

The ACAM is similar to approaches used by energy utilities to better match demand, cost allocation and rate design.
  

WRAM and MCBA: 

Both California American Water and the California Public Utilities Commission (CPUC) support the State of California’s policy of encouraging water conservation and efficiency. California American Water and the CPUC also recognize that reduced consumption can create a revenue shortfall. Reductions in revenue reduce funding available to California American Water to maintain the infrastructure necessary to provide reliable, safe drinking water. 

In 2010, to promote continued conservation and revenue stability, the CPUC authorized the Water Revenue Adjustment Mechanism (WRAM) and the Modified Cost Balancing Account (MCBA) for the Monterey District. The WRAM tracks the difference between authorized revenues and actual recovered revenues related to fixed costs. The MCBA tracks the cost savings and cost increases associated with purchased water, power, and pump taxes (variable costs). A surcharge is placed on customer bills if the company under collects its authorized revenue. Customers receive a credit on their monthly bills if there are over collections of authorized revenue. 

Water distribution is also impacted by the restrictions and limitations put in place by the State Water Resources Control Board and the Seaside Basin Watermaster. In response to these restrictions, California American Water implemented an aggressive, five-tiered rate design in 2010 to promote necessary conservation by customers. 

The five-tiered rate design did not increase overall revenues to the company. It reallocated revenue collection so that high-water-using customers paid a higher rate, and low-water-using customers paid a lower rate.  

The rate design worked and consumption was significantly lowered. Currently, there is a single WRAM/MCBA surcharge on Monterey Service Area bills that appears on customer bills as the WRAM/MCBA Surcharge, which will be in place until March 30, 2024 at a rate of $0.1997 per CGL of all water used. This surcharge recovers under-collections from 2016 forward. 

It is important to know that California American Water does not make money based on the volume of water sold. It is provided the opportunity, but not guarantee, to earn an authorized rate of return on its level of capital investment. The WRAM and MCBA are ratemaking mechanisms that break the link between water sales and revenues to encourage conservation.  

In September 2020, the Commission adopted Decision 20-08-047 directing five water utilities, including California American Water, not to propose continuing their existing WRAM/MCBA in their next general rate case applications. In September 2021, the Commission denied applications for rehearing of Decision 20-08-047. In October 2021, Petitions for Writ of Review were filed with the California Supreme Court.  While that decision remains in effect, it is subject to judicial review before the California Supreme Court. 

In September 2022, Governor Newsom signed into law Senate Bill 1469 which required the California Public Utilities Commission to consider the implementation of a decoupling mechanism.   On January 27, 2023, California American Water filed an updated application in its general rate case to propose a Water Resources Sustainability Plan (“WRSP”). The WRSP consists of several components, including the decoupling Essential Service Balancing Account, a modified Annual Consumption Mechanism, an adjusted amortization schedule, and rate design modifications. The WRSP is a regulatory mechanism designed to collect the required revenue to operate the water company and fund necessary infrastructure investments.  

How much is the current WRAM/MCBA surcharge?

The residential WRAM/MCBA surcharge is billed at a rate of $0.1904 per CGL of water use. 

The Non-Residential WRAM/MCBA surcharge is billed at the following rates: 

What is the current Low Income Ratepayer Assistance program?

Income eligible customers can receive a 30% discount on their monthly service charge and the rates in Tiers 1 through 3.
https://www.amwater.com/caaw/customer-service-billing/customer-assistance-programs

What resources are available to help customers save water and money on their bills?

California American Water offers robust conservation incentives including generous rebates for indoor appliances and efficient outdoor irrigation technology. Free devices including low flow showerheads, sink aerators and positive shut-off hose nozzles are also available at our business office during normal hours. In addition, customers may schedule a water wise house call, in which our conservation specialists will visit your home and make recommendations on ways to save water. Visit www.montereywaterinfo.org or call 831-646-3205 for more information.

Customer Bill Calculator

For customer convenience, we have an online single-family home Customer Bill Calculator. The calculations are intended for estimating purposes and are not a replacement for an actual utility bill.

CLICK HERE

How to read your bill

We offer a step-by-step instruction worksheet on how to read your bill. This online document will help you learn about how your bill is calculated as well as how to analyze your comparative monthly usage. It also includes important payment information and information regarding various surcharges that may appear on your bill.

CLICK HERE

Conservation programs

You are not alone in your effort to conserve water. We offer services, information and free water devices that could help you save water. This includes our Water Wise House calls where you can schedule one of our customer service representatives to come to your home and look for leaks and other opportunities for water savings.

CLICK HERE

Fact Sheets

Meter Fact Sheet