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 American Water filed a General Rate Case ("GRC") Application A.22-07-001 covering costs for the years 2024-2026. The Public Utilities Commission resolved A.22-07-001 in Decision 24-12-025, which was issued in December 2024.  On March 7, 2025,  California American Water implemented rates coming out D.24-12-025.  The decision authorized new rates for 2024. California American Water also filed for its 2025 Escalation Year increase for rates effective January 1, 2025. At the same time, an adjustment to rates to reflect the most recent water year’s (WY) consumption or Annual Consumption Adjustment Mechanism went into effect for 2024 and 2025. Annual Consumption Adjustment Mechanism rates were calculated to reflect actual water consumption during WY 2024 (October 2023 – September 2024). 

FAQ

What are the key features of the rate design?

• Inclusion of the 2024 test year rates, 2024 ACAM, 2025 Step Rates, and 2025 ACAM as filed through Advice Letters 1459-1462.
• Each of these rates took effect March 7, 2025.
• 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.

What are the components of my rates?

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 March 7, 2025)

What ratemaking mechanisms impact my rates?

The Annual Consumption Adjustment Mechanism ("ACAM"): 

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.

Conservation Adjustment for Rate Tier Designs Mechanism (“CART”):

The CART which tracks the difference between revenues collected under the standard rate design and revenues collected under the conservation-oriented rate design. The CART mechanism is effective as of January 1, 2024.

Water Revenue Adjustment Mechanism (“WRAM”) and the Modified Cost Balancing Account (“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.

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 decouple or break the link between water sales and revenues to encourage conservation.  Implementation of the ACAM significantly cut down WRAM/MCBA balances.

Currently, there is a single WRAM/MCBA surcharge on Monterey Service Area bills that appears on customer bills as the WRAM/MCBA Surcharge.  GRC Decision 24-12-025 did not approve continuation of a full decoupling mechanism but did allow California American Water to collect authorized WRAM/MCBA balances accrued through the end of 2023.

How much is the current WRAM/MCBA surcharge?

The residential WRAM/MCBA surcharge is billed at a rate of $0.2871 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 35% 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