On December 8, 2025, the California Court of Appeal issued its decision in Dreher v. City of Los Angeles Department of Water and Power, affirming Los Angeles Department of Water and Power’s budget-based tiered water rates for single-dwelling unit customers. The Court rejected Patz v. City of San Diego’s strict interpretation of Proposition 218 in several key respects, finding: agencies may base tiered rates on source-of-supply costs even when supplies are commingled; tier breakpoints do not require cost-based justification; and agencies may rely on peak pumping and storage costs to support higher rates in upper tiers.