Your Rates are changing


Every day, water utilities around the world set rates to collect the revenue necessary to operate water systems. While this sounds simple, it can be much more difficult in actuality. Here in Monterey, we have competing goals to achieve in our rate designs, which blend strong rate signals to conserve with 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.

In December of 2018, the California Public Utilities Commission issued a decision in California American Water’s General Rate Case covering costs for the years 2018-2020. Due to a delay in the decision, the CPUC ordered California American Water to simultaneously implement the 2018 and 2019 rate changes. These rate adjustments affect all customers in the Central Division (Monterey Main, Bishop, Ryan Ranch and Hidden Hills service areas) and became effective in May 2019.


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. However, California American Water’s revenue also fell. The company was unable to collect the revenue needed to provide water service and continue with improvements to infrastructure.

In response to this problem, the Commission authorized California American Water to recover those under-collections for the years 2010-2014 over a five-year period.

Currently, there are two WRAM/MCBA surcharges on Monterey County District residential customer bills. The first surcharge appears on customer bills as the Pre-2015 WRAM Surcharge, which will be in place until February 28, 2022, at a meter based rate. This surcharge recovers under-collections for the years 2010-2014. The second surcharge appears on customer bills as the Post-2015 WRAM/MCBA Surcharge, which will be in place until March 30, 2022 at a rate of $0.2219 per CGL of all water used. This surcharge recovers under-collections from 2016.

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 rate-making mechanisms that break the link between water sales and revenues to encourage conservation.

The Annual Consumption Adjustment Mechanism

The Public Utilities Commission recently 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 current production forecasts will ensure more efficient revenue collection, which significantly cut down or even eliminate WRAM/MCBA balances.

The ACAM, although new to customers in the water industry, it is similar to approaches used by energy utilities to better match demand, cost allocation and rate design. The proposed ACAM is a pilot program limited to the Monterey District.


What are the major changes to the rate design?

  • Rate increases for both the 2018 Test Year and 2019 Step Increase coming out of Commission Decision D.18-12-021.
  • A rate decrease, to reflect the most recent year’s water consumption through the Annual Consumption Adjustment Mechanism (ACAM).
  • A rate increase, for cost recovery of the recently constructed Monterey Pipeline and Pump Station Project.

The majority of the cost increase you see is to pay for new infrastructure to serve the community’s water needs. Our community’s current major water supply sources, the Carmel River and the Seaside Basin, are restricted by the State of California. The Carmel River, where the majority of our water comes 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. The Monterey Pipeline is now reflected in your rates and is a key part of this program, which will protect our community from drought and avoid severe water restrictions for years to come.

What will be the average rate impact due to these changes?

The average, monthly total bills are estimated to be as follows:


100 gallon units (CGL)    

New Rates

Single Family






Low Income






*Assume Division 1 customer

When will these changes go into effect?

The new rates will be reflected in customers’ May 2019 bills.

How does the residential rate plan work?

Rates feature five 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.


Single Family Rates (Effective May 2019)

Tier 1  

0 to 29.9 CGL


Tier 2  

30 to 59.8 CGL


Tier 3  

59.9 to 104.7 CGL


Tier 4  

104.8 to 172 CGL


Tier 5  

More than 172 CGL  


Multifamily Rates (Effective May 2019)

Tier 1  

0 to 18.7 CGL


Tier 2  

18.8 to 37.4 CGL


Tier 3  

37.5 to 50.5 CGL


Tier 4  

50.6 to 69.2 CGL


Tier 5  

More than 69.2 CGL  


Non-residential Rates (Effective May 2019)

Division 1  

Rate for all units   


Division 2  

Rate for all units  


Division 3  

Rate for all units  


Division 4  

Rate for all units  


What are the new monthly service charges?

The new monthly service charges will be as follows: (Effective May 2019)

Meter Size    












1 ½


















How much will the current WRAM surcharge?

The WRAM surcharge is unchanged from last year and is as follows:

Meter Size    












1 ½”



















What is the current Low Income Ratepayer Assistance program?

A qualified customer will receive a 30% discount on their monthly service charge and the rates in Tiers 1 through 4.

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 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.


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.


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.


Fact Sheets

Meter Fact Sheet