Since Marin Water last updated its rate structure in 2019, reduced demand for water and record inflation have significantly altered Marin Water’s budgets. Operating under these pressures, and within its current rate structure, Marin Water’s deficit continues to grow by about $1 million per month.

However, this proposed rate increase is not just an opportunity to reassess budget forecasts, it provides for greater investment in our community’s water resiliency and enhanced system reliability to ensure 24/7 on-demand water service for our customers. With this rate adjustment, Marin Water will be able to target funds in the following five key areas to ensure a resilient and dependable water service for our 191,000 current customers and for future generations to come:

1.  Replace and modernize aging infrastructure
2. Accelerate mitigation work to reduce wildfire risk and enhance forest-health restoration efforts on the Mt. Tam Watershed, which is the primary source of water supply for the District.
3. Keep pace with inflation and the rising costs of operating and capital expenses
4. Strengthen water supply resiliency in the face of climate change
5. Replenish reserves to prepare for future emergencies

Marin Water's proposed rate structure results in a variety of customer bill impacts, which depend on each customer's meter size and water usage. The table below summarizes the percentage increases in bi-monthly bills over the four-year planning period for Single Family Residential Customers who have a 5/8" meter under five different water use scenarios.

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The graph below shows the bi-monthly fixed and variable rates for Marin Water single-family residential customers with a 5/8” meter under four different water use scenarios. The displayed rates include the Service Charge, Capital Maintenance Fee, and Watershed Management Fee. 

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View the chart as a larger PDF

The graph below shows the bi-monthly rates over the four-year planning period for the average (typical) single-family residential customer with a 5/8” meter. 

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View the chart as a larger PDF

In order to maintain our commitment to serving central and southern Marin County with clean, reliable water now and for generations to come, Marin Water is proposing changes to some customer rate tiers and a conversion of the Watershed Management Fee to a volumetric rate that will help reduce fixed fees for most customers. Additionally, Marin Water is proposing to establish drought surcharges, which would go into effect consistent with the District’s Water Shortage Contingency Plan. The proposed rates, fees and charges would become effective July 1, 2023, 2024, 2025 and 2026 and vary by customer class. More details: 

• Customer Rate Tiers - The rates for different levels of water usage are tiered by customer class and calculated to recover a portion of Marin Water’s fixed and variable costs of providing water service. Tier 1 usage is billed at the lowest rate. Additional water use is billed at higher tier rates because higher water use places greater demands on the water system and limited water resources, increasing costs for Marin Water. Marin Water is proposing to modify the tier structure to better recover the cost of providing water and to reflect current customer demand trends. Increases to volumetric unit rates are needed to invest in water supply resiliency, replenish reserves, keep pace with inflation and improve aging infrastructure.  
   
• Watershed Management Rate - The current Watershed Management Fee (WMF) is a fixed charge that was designed to recover some of the watershed maintenance and vegetation management costs. Marin Water is proposing to convert this fixed fee to a volumetric rate so that all customers pay an equal amount in relation to the amount of water they use.  
   
• Capital Maintenance Fee - The Capital Maintenance Fee (CMF) is a per meter charge based on meter size. Funds raised through the CMF go directly to Marin Water’s Capital Improvement Program (CIP), which is dedicated to maintaining, upgrading, rehabilitating and building resiliency into our existing and aging infrastructure.  A portion of the CMF may be used to pay debt service. Marin Water is proposing to adjust the capital maintenance fee effective July 1, 2023, followed by five percent increases in future years.  
   
• Service Charge - The fixed Service Charge is established partially on the basis of the size of the water meter (in inches) serving a property and is calculated to recover a significant portion of Marin Water’s fixed costs, including billing and collections, customer service, meter reading, meter maintenance, and facility maintenance and administrative support. Marin Water is proposing to adjust the service charge effective July 1, 2023, followed by five percent increases in future years 
   
• Temporary Drought/Water-Shortage Surcharges - Marin Water is proposing drought surcharge rates, which would become effective when water storage levels meet specific thresholds outlined in Marin Water’s Water Shortage Contingency Plan. The purpose of drought surcharges is to help keep Marin Water financially sustainable in the event of future droughts or other water shortage emergencies that result in reductions in customer water usage and associated revenue losses. 

The Marin Water Board of Directors will hold a public hearing to consider the proposed increases to customer water rates, fees and charges at 6:30 p.m. on Tuesday, May 16, 2023. If adopted, the initial rate changes would take effect in July 2023. Prior to the Public Hearing, written notice of the proposed changes will be mailed to all customers and property owners. 

A formal notice of any proposed rate adjustment is mailed to all customers and property owners of parcels within Marin Water’s service area boundaries. The notice contains the details of a public hearing where the proposed rates are to be considered for adoption by the Board after a formal 45 day public input period. Notices detailing the current rate proposal and upcoming public hearing were mailed to all customers and property owners in Marin Water’s service area in late March 2023. The notice included instructions on how customers may protest the rate proposal if they choose. These instructions for protesting are as follows:

To protest the 2023 rate proposal, you must submit your protest in writing, even if you plan to attend the May 16 public hearing virtually or in person. If written protests are submitted by a majority of the affected  parcels, the proposed rate changes will not be imposed. Only one written protest will be counted per identified parcel. Your written protest must be received prior to the close of the May 16, 2023, public hearing. Written protests must identify: 

1. Customer OR property owner name 
2. Parcel number OR Marin Water account number OR address where water service is provided 
3. Signature of property owner OR water customer 
4. Statement in opposition to the rate proposal 

Protests must ONLY be submitted by mail or in person to the following address (emailed submissions not accepted): 

     Board Secretary 
     Marin Water     
     220 Nellen Ave. 
     Corte Madera, CA 94925 

Pursuant to Government Code Section 53759, there is a 120-day statute of limitations for any judicial action or proceeding challenging any new, increased, or extended water rate, fee or charge. 

Marin Water currently offers multiple discount and waiver programs for eligible customers. These discounts include income-based waivers and medical disability discounts. Marin Water's income-based waiver program is one of the most generous in the Bay Area, and it currently assists more than 1,000 customers with paying their water bills. For eligibility information, or to download an application form, go to marinwater.org/discounts. 

Residents in central and southern Marin County have demonstrated a strong commitment to reducing water waste, at times outperforming most of the state when it comes to conservation. But that lowered water use does not necessarily correspond to lowered operational costs for Marin Water. In fact, over 95% of District expenses are fixed and do not decrease when residents conserve. Care and maintenance of seven reservoirs and their surrounding 22,000 acres of watershed lands, which serve as the primary source of water supply for District customers, and operation and upkeep of a complex water treatment and distribution system are all required before a drop of water is ever delivered to your tap. In the business model of a municipal water utility, when customers use less water and operational costs stay flat, the cost for each unit of water actually goes up.   

However, the District understands that low water users are impacted by the percentage of fixed fees and has looked closely at ways to reduce fixed fees while ensuring compliance with cost of service and proportionality among the District’s customer base. Still, even the lowest water users must bear their fair share of infrastructure and service costs, as many of these costs are independent of customer water use.  

Tier breaks were evaluated as part of Marin Water’s Cost of Service Analysis, and like the rate schedule for each tier, are supported by a cost analysis. Marin Water cost justifies its rates within each tier, and there is detailed analysis to support these rates in the Cost of Service Analysis. Tier 1 usage is billed at the lowest rate, with higher tiers billed at higher rates due to elevated demands on the water system.  

On May 2, 2023, Marin Municipal Water District and the Coalition of Sensible Taxpayers (CO$T) and other individually named plaintiffs reached a settlement in the 2019 case of the Coalition of Sensible Taxpayers, et al. v. Marin Municipal Water District. The agreement addresses a long-standing lawsuit filed by CO$T over water rates that Marin Water adopted in 2019. This dispute centered on certain fixed fees in customers’ water bills that vary according to the size of their water meters. CO$T alleged that the Watershed Management Fee and the Capital Maintenance Fee in the 2019-2023 rate structure were not compliant with the legal requirement that water charges be proportional to the cost of service, as mandated by Proposition 218. Marin Water disputed that claim and maintains that these charges were legally adopted and comply with Proposition 218. Both Marin Water and CO$T eventually agreed it was in the best interest of ratepayers as well as both parties to settle the dispute outside of court due to the likelihood of a costly and lengthy litigation process.

Final settlement of the case will only become effective if the Marin Water Board of Directors adopts certain modifications to its Watershed Management Fee and its Capital Maintenance Fee, which are being considered as part of the current rate setting process.

For further details on the settlement, please read the joint statement issued on the matter by Marin Water and CO$T.

No. Water rates are typically updated every three to five years to ensure that revenues are fully covering the cost of providing service and the rates are proportionally allocated across the customer base. As part of the rate setting process, Marin Water evaluates its infrastructure needs, programs, operations and maintenance costs. In 2022, Marin Water hired an independent water rate consultant to determine how best to recover these projected costs over the next four-year period. The rate consultant conducted an evaluation of the existing rate structure and recommended a rate design that included several components, including: 

1. Reduced fixed fees for most customers
2. Increased volumetric charges for potable water
3. Lower residential tier breaks
4. Drought surcharges 

Capital investments have been a top priority for Marin Water in recent years. As the first municipal water district in California, our 110-year-old district must continually invest in the complex water system comprising seven reservoirs, three treatment plants, 97 pump stations, 130 storage tanks and more than 900 miles of pipeline.  

The overall level of infrastructure needed to maintain our watershed, treatment plants and distribution network is generally higher than other utility districts on a per capita basis. This is primarily due our service area’s unique topography, which requires more lift stations and storage tanks, and a low population density, which results in a smaller base of customers to distribute the costs.   

While our current investment totals over $20 million each year, it is enough to address only basic repair needs and meet minimum replacement schedules. The current funding level results in growing deferred maintenance each year and does not provide sufficient funding to address large-scale or system-critical projects. While staff is actively pursuing grants and other outside funding sources to reduce the costs for customers, greater levels of infrastructure investments are needed to ensure Marin Water is able to consistently and reliably deliver water for its customers over the long term. 

Marin Water is committed to the responsible stewardship of ratepayer dollars, striving to leverage that support to make sound investments while maintaining a disciplined financial philosophy.  

Marin Water has 20 fewer employees than it did in 2012, representing an 8% drop in staffing in the past decade. With rising costs, and dwindling revenues in the past couple of years, Marin Water has delayed hiring certain positions and postponed some capital maintenance projects, saving a combined $9 million through the end of the current fiscal year.  

Marin Water is also considering a number of revenue enhancements outside of the rate setting process, including increased fees for telecommunications sites on our watershed lands, modifying leak adjustment billing practices and continuing to leverage grant opportunities and loan programs. In just the last couple of years, Marin Water has successfully secured a range of outside funds to for capital projects, watershed fuel reduction, creek restoration and conservation programs that support customers. A few examples include: 

1. $4 million in combined total from CAL FIRE and State Coastal Conservancy for fire fuel reduction and forest restoration work on the Mt. Tam watershed 
2. $1 million allocation from the State of California’s 2022 surplus budget for permanent emergency generator installation at the San Geronimo Treatment Plant 
3. $1.4 million from the Federal Bureau of Reclamation for salmon habitat restoration work on Lagunitas Creek 
4. $969,000 in state and local grants for construction of the new Azaela Hill multi-use trail on the Mt. Tam Watershed 
5. $212,000 in state grants to subsidize the cost of smart water metering devices for customers 

Marin Water has established a comprehensive internal control framework in conformity with Generally Accepted Accounting Principles (GAAP). Each year, Marin Water’s financial statements are audited by an external auditor and financial statements are made available to the public on our website.  

In 2022, Marin Water was awarded the Certificate of Achievement for Excellence in Financial Reporting from the Government Finance Officers Association for its Comprehensive Annual Financial Report for fiscal year ending 2021. This is the highest form of recognition in the area of governmental accounting financial reporting. View the District’s financial reports. 

The majority of water flowing into Marin Water customers’ taps is locally sourced from the Mount Tamalpais Watershed and the hills of west Marin County. The remainder comes from the Russian River Watershed via contracts with Sonoma Water.  The District also provides customers recycled water for irrigation through a partnership with the Las Galina Valley Sanitary District. Learn even more about the journey your water takes to reach your tap through our “Your Water’s Journey” educational resources. 

All revenues received by Marin Water are reinvested into your water system. In addition to funding the ongoing operational and service costs of delivering clean, reliable water to customers, funds from the total four-year rate increase will be invested in the following ways: 

• Approximately 20% is for increasing water supply, including immediate implementation of near-term actions and building a water supply reserve fund for longer-term projects that will take time and significant funding to develop 
• Approximately 20% is for enhanced capital infrastructure project spending to catch up on deferred maintenance and implement additional large projects that will improve system reliability 
• Approximately 6% is for critical technology enhancement  
• Approximately 5% is for reserve replenishment to recover from the previous drought emergency to be ready for the next earthquake, wildfire, drought or other emergency 
• About 2.5% is for service enhancements, including expansion of fire fuel reduction work on the Mt. Tam Watershed and the addition of a full-time watershed ranger trainee position to protect the District’s primary source of water supply  

Severe conditions brought on by the drought during the past several years have intensified Marin Water’s focus on strengthening the reliability of its water supply. In late February, Marin Water adopted a roadmap that will secure new water supplies within the next few years, while also pursuing pre-design work to support additional medium- and longer-term water supply options.   

Approximately 20% of each year’s proposed rate increase will fund water supply efforts outlined in the roadmap. Over the next four years, these investments will fund projects such as: 

• Electrification of Soulajule: Provides PG&E line power to the pump station at Lake Soulajule so that the lake can be operated more frequently.  Estimated water yield: 420 AFY 

• Phoenix-Bon Tempe lakes connection: Installs a connection from Phoenix Lake to Bon Tempe reservoir, increasing District control over water flows.  Estimated water yield: 260 AFY 

• Maximizing water imports from Sonoma Water: Develops operational rules to guide the timing and quantity of water purchased from Sonoma to maximize take of supplemental water in dry years while minimizing risk of reservoirs spills.  Estimated water yield: 2,000 AFY 

• Expand conservation investments: Provides greater funding to existing programs that support customers in efficient water use in their home/business, reducing demand on the water system. Estimated water yield: 160 AFY 

• Longer-term supply exploration/pre-design: Pursues options to achieve longer-term supply goals – this includes exploring the feasibility of groundwater banking and increases to local surface storage, enhancing local water supplies. 

• Build water supply reserve: Build up funding in reserves for future longer-term water supply options that are in development. 

Yes. A court case involving the Florin Water District took up this question in the past decade when that district introduced a rate increase, in part, to restore reserve funds. The district lost the case because it failed to identify the necessary level of reserves, the amount of reserve recovery each year, as well as the proposed use of the reserves. The court rejected that approach, but not the underlying concept that reserves are a cost of service. This is why Marin Water has been engaged in a detailed discussion about the need and rate of reserve replenishment consistent with the District’s reserve policies.  

Water rates are typically updated every three to five years to ensure that the cost of providing service is proportionally allocated across the customer base. Since 2010, Marin Water has conducted a Cost of Service Analysis five different times. In addition, as part of each budget cycle and as part of each year’s annual financial report, staff reviews rate revenues and associated expenditures.  

In the prior three rate cycles, Marin Water made updates to fixed fees aimed at caretaking critical infrastructure and watershed lands and the 2019 rates included inflation-based indexes as the basis for annual increases to keep pace with rising costs. Nationwide trends show that water rates typically increase at double the rate of inflation, driven by aging infrastructure, as well as regulation and climate change. By comparison, Marin Water rate increases have been just half of industry trends, and 14 years of rate freezes in the past 30 years have reduced the District’s ability to address aging infrastructure, while water efficiency and conservation efforts combine to produce higher per-unit costs for the District.
Review a Jan 3, 2023 Board meeting presentation about past rates and rate setting.      

The proposed rate increase is larger than most of the District’s past rate changes. This is due in part because Marin Water is recovering from a historic drought and has committed to implementing actions that will enhance our water supply resiliency. The rate increase also addresses inflationary pressures and includes significant additional funding for capital projects.    

Since 1992, the District had 16 years with no rate increases. Compared to national averages tracked by the American Water Works Association, which show 10% average annual rate increases for other water utilities, Marin Water’s average annual rate increase of 4% over the past 30 years has just barely kept up with inflation. As a result, many important capital maintenance programs have been delayed, making this year’s rate adjustment more impactful than previous years.  

In Fiscal Year 2022, approximately 82% of the District’s water was sold in Tier 1, while Tier 2 was about 12%, Tier 3 was about 4% and Tier 4 was 1%. This represented a shift in usage patterns from prior years where Tier 1 water sales accounted for about 75% of all water consumption. The District expects future demand patters to be similar to Fiscal Year 2022 with some increases over the four-year rate period. 

As with all aspects of the water rate-making process, tiered rates must be cost-justified and therefore the District cannot arbitrarily decide how much water should be sold in each tier. The recent Cost of Service Analysis examined water use patterns and the related costs, and determined that tier breaks for Single Family Residential customers should be adjusted.  

Under the proposed rate structure, lower water users will see a smaller percentage increase than higher water users. One of the primary substantive requirements of Proposition 218 is that water rates be developed to proportionally recover the cost of providing water service. This means that higher water users should pay their proportional share of water production and distribution, but the proportional share must be firmly rooted in the cost of providing water.  The District’s Cost of Service Analysis provides a detailed explanation of the costs associated with additional incremental water usage, which serves as the basis for the District’s tiered rate structure and ensures that the costs are recovered proportionally from each customer.   

Marin Water’s current rate structure provides approximately $20 million annually for capital improvement projects. This funding is primarily derived from the Capital Maintenance Fee. However, $20 million per year is only enough to maintain minimum replacement schedules and it does not provide sufficient funding for large-scale projects. Moreover, since the current funding levels are insufficient to address the recommended replacement schedules for basic infrastructure, Marin Water’s existing backlog of maintenance projects grows each year. The proposed rate structure provides gradual increases in capital funding to help bring the district closer to the recommended replacement and maintenance schedules, and also provides necessary funding to allow Marin Water to seek debt financing for large scale, system-critical projects in future years.