The City of San Juan Capistrano rate case found that San Juan Capistrano’s tiered rate structure was unconstitutional because it charged more for water than it cost the city to provide the service. Water providers must demonstrate that fees correspond to the cost of providing the service. If heavy water users cause a water provider to incur additional costs, it would then be legal to charge the users for those increases. Rancho Water’s budget based tiered rate structure sets costs at different tiers based on the cost of the water service being provided. Rancho Water has groundwater as one source of water that is significantly less expensive than imported water. Therefore, the first tier of water is charged less as it represents the cost of service for groundwater. Moving up in the tiers, customers are paying for the higher imported fees that the District has to pay.