Water Rates and Charges

Your property tax bill includes two main charges that help pay for important water services in the Municipal Water District of Orange County (MWDOC) service area. Both charges are determined and levied by MWDOC’s wholesaler, the Metropolitan Water District of Southern California. These two charges are the Ad Valorem Property Tax and the Standby Charge.

1. Ad Valorem Property Tax (Metro Water D-MWDOC)

• • What it’s for: The Ad Valorem tax helps pay for Metropolitan’s share of the State Water Project (SWP), a large system that brings water to many parts of California, including your area. This project is one of Metropolitan’s largest annual costs, and this tax helps cover those costs. The total cost for the State Water Project is about $700 million each year, and the Ad Valorem tax contributes around $317 million.
  • How it’s paid: This tax is based on the value of your property. The current rate is 0.007%. To figure out how much you owe, you multiply your property’s assessed value by this rate. For example:
    • If your property is worth $529,789, your tax would be: 529,789 × 0.00007 = 37.08. So, you’d pay $37.08 toward the Ad Valorem Property Tax.
  • How it’s decided: The tax rate can change each year based on decisions made by Metropolitan Water District (Metropolitan). They are responsible for collecting enough money to cover their share of the State Water Project costs. The rate is reviewed and approved by the board each year.
  • Why it’s important: This tax helps fund the infrastructure that brings water to your home. It is a critical component of the revenue needed to maintain the aqueducts, reservoirs, and other infrastructure that deliver water from the State Water Project

2. Standby Charge (MWD Water STDBY CHG)

• • What it’s for: The Standby Charge helps pay for emergency water storage capacity. This charge also includes the recovery of costs associated with capacity to meet outages and hydrologic, ensuring that even if something goes wrong with the regular water supply (like during a drought or a system failure), there is a backup water supply/system at the ready. This charge is part of what’s called the Readiness-to-Serve (RTS) Charge, which covers the cost of keeping water available when it’s needed most.
  • How it’s paid: The Standby Charge is added to your property tax bill, but the tax bill portion only covers about 33% of the total RTS Charge. The rest (66%) is paid through by the local water agencies in Orange County. In your tax bill, the Standby Charge is around $10.08.
  • How it’s decided: Since 1993, Metropolitan has allowed agencies like MWDOC to cover part of the RTS Charge through the Standby Charge on property taxes. The rates have stayed the same since that time and can’t go higher than they were in 1996 unless voters approve a change. Each year, Metropolitan reviews whether to continue the Standby Charge.
  • Why it’s important: The Standby Charge ensures there is always a backup supply of water ready in case of emergencies or outages. It helps keep water service reliable and makes sure water is available when regular sources can’t meet demand.

CLICK HERE to view an Example Bill

Metropolitan sells imported water to MWDOC, which in turn allocates those costs to the local, retail water agencies. Everyone in Orange County uses some amount of Metropolitan imported water. Some areas in South Orange County are almost 100% dependent on imported water and the opposite is true for some retail agencies in North Orange County. However, even these groundwater-based utilities use imported water to replenish groundwater supplies.

Metropolitan has a fairly complex rate structure. Some of the charges are volumetric whereby MWDOC is charged a rate per Acre-Foot of water delivered (approximately 325,850 gallons) and depending upon whether the water is already treated (ready to consume (potable)) or untreated, there is an additional charge for treatment. These are fixed charges such as the capacity charge and the Readiness-to-Serve (RTS) charge.

The capacity charge is designed to recover the capital costs to meet short-term peak demands of the system. Retail customers usually use more water in the summer than the winter and may use more water in a dry year than a wet year. This results in different agencies increasing or decreasing their demand on imported water. The water distribution system is designed and built to handle the combined peak demands of all the customers. The capacity charge recovers the costs to provide this operational flexibility by charging an agency’s highest 1-day flow (measured in cubic feet per second (cfs)) over a three year period to determine the agency’s peak capacity for which the agency is charged.

The RTS charge is similar in that it allocates capital costs but in this case for long-term reliability, such as emergency storage capacity and standby services. The long-term aspect of these costs are reflected in the use of a 10-year average of a member agency’s water purchases to allocate the costs.

While the vast majority of Metropolitan’s charges are reflected in the monthly water service bill, two charges do appear on the property tax bill in Orange County. Approximately one-third of the RTS charge is billed by Metropolitan on the property tax bills in the form of a “Standby Charge.” This is also an ad valorem property tax to recover capital costs in association with the State Water Project where water is conveyed from Northern California.

Metropolitan approves its rates and charges on a two-year budget cycle with limited annual updates.

MWDOC’s rates and fees generally fall into three categories: (1) the pass through of costs from Metropolitan for imported water rates and charges; (2) specific charges for services contracted by our Member Agencies (Choice Budget); and (3) charges for MWDOC services that apply to all our Member Agencies (Core Budget).

The pass through rates and charges from Metropolitan are normally billed on a monthly basis to our Member Agencies with the majority of the cost allocation based on volumetric purchases. The fixed charges require somewhat more involved allocation calculations. The total amount of these Metropolitan charges are projected to be approximately $208 million in FY 2024-25.

The Choice Budget fees are primarily associated with the water education school program and the water use efficiency program, including conservation rebates. MWDOC Member Agencies elect to subscribe to specific programs and can opt-out of program participation. The MWDOC Choice Program budges for FY 2024-25 is approximately $1.96 million.

MWDOC’s Core Budget includes all other programs and functions provided to our Member Agencies: Water Reliability Planning, Metropolitan Activities, Government Affairs, Public Affairs, Water Use Efficiency, Emergency Response, Board Functions, Finance, Information Technology, and Administration. The FY 2024-25 Core budget is approximately $10.8 million. The approved rate structure calculates two different charges for MWDOC customers. For the retail Member Agencies, a fee is assessed on the total number of retail meters an agency has in its service area. The intent is to provide more equity among the different agencies as MWDOC services bear a greater relationship to the total number of retail meters than the volume of water purchased. For the remaining groundwater agency, which does not have retail meters and requires a different set of services, the rate is based on a combination of factors including a proportional share for specific cost of services and a long-term volumetric average.

MWDOC Rates & Charges

MWDOC Rates & Charges	July 1, 2024
Retail Member Agencies	$14.75 per year per retail water meter
Groundwater Agency Charge	$405,463 per year

The local retail water agencies take all of their anticipated costs and develop a system of local rates and fees to fund the construction, operation and maintenance of the local systems that deliver water to your doorstep. While all rates are adopted through a transparent and public process, there is a wide variation in the rate programs that are enacted. Some agencies have a significant component in property taxes while others have none. Some rate structures charge the customer the same amount for every volume unit they use (flat rate structure) while others charge higher rates the more water you use (inclining & tiered rate structures). There are often different rates and charges dependent upon the size water meter you have.

For information on local water rates in your area, please contact your local water provider as listed on your water bill.

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