Proposition 218 is pushing California's conservation-pricing programs to evolve. Conservation-pricing programs use price signals to discourage the waste of water. Currently, such programs commonly rely on tiered rates. Customers pay a flat fee for a "basic use allocation," which "provides a reasonable amount of water for [each] customer's needs and property characteristics."1 Once the basic use allocation is exhausted, a higher rate is charged for each additional unit of water consumed.2 Tiered-rate programs have proven effective even when per-unit price increases are small. Historically, both California's Legislature and its courts have favored such programs, finding them consistent with Section 2 of Article X of the State's Constitution, which states that "the conservation of [the State's] waters is to be exercised with a view to the reasonable and beneficial use thereof."3
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