EMBUD To Overhaul Capacity Fee Structure

(March 9, 2026) The East Bay Municipal Utility District is moving toward a significant overhaul of how it calculates the capacity fees charged to new water and wastewater customers — a change that would streamline its multi-tiered system and, in many cases, substantially reduce costs for most residential and commercial applicants. EBMUD serves nearly 2 million people in portions of Alameda and Contra Costa counties.

The proposed shift was previewed at EBMUD's February mid-year budget and finance workshop. (Click HERE to view staff presentation.) Staff is currently working with an independent rate consultant to develop updated System Capacity Charges (SCCs) for the water system and Wastewater Capacity Fees (WCFs) for the wastewater system, with board adoption targeted for June 2026 and new rates taking effect in FY 2027.

Developers of all project types — with the exception of single-family residential projects in EBMUD's Region 1 — may want to consult with EBMUD staff about the potential advantages of timing their service applications to coincide with the new fee structure, which is expected to take effect July 1, 2026.

The Problem: Complexity

The current fee structure has grown unwieldy over the decades, reports EBMUD staff. For water capacity fees, the district maintains 27 different charge levels for meters up to 1½ inches, varying by customer type and by one of three geographic regions. For larger commercial or industrial meters, staff must perform a custom calculation based on projected water demand in gallons per day. The wastewater schedule similarly requires 12 distinct charges for residential and smaller meters, plus custom calculations for larger non-residential meters based on both meter size and wastewater strength. Staff noted that compared to other California water agencies, EBMUD's approach is complex and difficult for applicants to understand or anticipate.

The Proposed Approach: Meter-Based Charges

Under the approach under consideration, EBMUD would replace demand- and region-based formulas with a structure built around meter size. The result would be a dramatically shorter fee schedule — the current 27-entry water connection table for smaller meters would collapse to just four tiers, with standard published charges replacing custom calculations for all larger meter sizes. The wastewater capacity fee schedule would undergo a similar simplification. All residential meters up to 1 inch would be charged at the same rate as a 5/8-inch meter, on the basis that smaller meters are sufficient to serve typical residential domestic demand.

What the Numbers Look Like

The financial impact varies considerably by applicant type. For a single-family home with a 1-inch meter, the current water capacity fee ranges from $13,881 in Region 1 to $21,494 in Region 2 and $40,614 in Region 3. The proposed new charge would be approximately $20,000 regardless of location.

The shift is more dramatic for multifamily and commercial customers. A 100-unit apartment building connecting through a 4-inch meter currently owes between $876,700 and $1,228,200 in water capacity fees; under the new schedule, that same building would pay approximately $600,000. A commercial customer using 25,000 gallons per day through a 4-inch meter currently faces charges ranging from $1.8 million to $2.6 million — dropping to approximately $600,000 under the meter-based approach.

On the wastewater side, a single-family home would see its wastewater connection fee rise modestly from $3,125 to approximately $4,000, while a 100-unit apartment building currently charged $219,200 would drop to approximately $120,000. Commercial customers with high-strength wastewater face the most dramatic reduction, from over $1.7 million under the current formula to approximately $120,000.

Revenue Impact and Next Steps

Staff acknowledged that the restructuring will reduce total capacity charge revenues, but characterized the impact as manageable within the district's long-range capital plan, noting that capacity charges represent roughly 2 percent of total budgeted operating revenue in both systems. A formal rate report is expected in May 2026, with adoption of updated charges scheduled for a public hearing on June 9, 2026. All values remain preliminary and subject to ongoing rate studies.