Orange County advances reclaimed-water rate overhaul to full cost recovery; residents to face tiered increases

Orange County commissioners on Jan. 7 accepted a preliminary reclaimed-water charge schedule that would shift the utility toward full cost recovery and introduce tiered residential conservation rates, county staff and the consultant said.

Comptroller Glenn Kramer and Stantec consultant Eric Grau presented the rate study findings, which show the reclaimed-water system currently recovers roughly 73% of system costs and faces an estimated $5.3 million revenue shortfall in fiscal 2025. The consultant recommended recalculating fixed monthly charges and volumetric rates, eliminating monthly allowances and instituting conservation tiers for residential customers with meters under 1 inch.

Under the recommended structure: residential meters would have three conservation tiers (Tier 1: 0–4,000 gallons; Tier 2: 5,000–12,000 gallons; Tier 3: 13,000 gallons and above). Tier 1 would be deeply discounted (about $0.29 per 1,000 gallons); Tier 2 would remain close to current rates (roughly $1.30 per 1,000 gallons); and Tier 3 would charge a higher rate intended to discourage excessive irrigation (about $2.21 per 1,000 gallons). The proposed changes would affect commercial and interruptible large users with different simplified structures for those classes.

County staff said a household using up to 12,000 gallons a month—the typical irrigation volume for a quarter-acre lot—would see an increase of no more than about $0.40 per month; the county estimates roughly 60% of bills are for 12,000 gallons or less. Customers using substantially more reclaimed water would see larger monthly increases intended to encourage conservation.

The board unanimously approved placing the new schedule on a preliminary basis and set a duly noticed public hearing process before final adoption; staff said the proposed schedule would not take effect until after the final hearing (staff recommended an effective date of Oct. 1, 2025 to give bulk customers and partner cities lead time for budget planning).

Commissioners pressed staff on potential exemptions and impacts. Commissioner Martinez Simrad asked whether an agricultural exemption was possible; staff reported identifying about 18 agricultural-related customers using reclaimed water in the system and said only two or three are operating farms that could be affected. Staff estimated that one heavily impacted customer could reduce costs by downsizing a very large meter (an 8-inch vs. 16-inch) at an estimated meter-install cost of roughly $18,000 with a payback in under a year from lower rates in some circumstances.

Why it matters: The reclaimed-water system serves residential irrigation and commercial irrigation users countywide and is tied to regional water-resource planning and consumptive-use permits. Moving to full cost recovery shifts costs to reclaimed-water users and reduces cross-subsidy from the wastewater enterprise.

Next steps: Staff will host outreach to highly impacted commercial customers, publish bill-calculation tools and hold a noticed public hearing before final adoption. The board set the preliminary adoption on Jan. 7 and will consider a final rate ordinance after public notice and hearing.