California’s continuing drought underscores the severity of the State’s water supply defects. While in one respect all water supply problems are local, the expanding role of water transfers and development of new sources of supply create a common thread linking all water purveyors, and highlights the growing need for recycled water supplies and expanded water reuse systems. Among the challenges of an expanding role  for recycled water is how to appropriately price it, particularly in light of on-going court decisions that have raised questions about new restrictions on   pricing alternatives.

This paper is intended to provide a brief discussion  and general guidance on pricing principles and mechanisms that water agencies may want to consider when establishing rates for recycled water customers.