Shelly Road Crest Acres Water District v. City of Coquille

SCHWAB, C. J.

This is a declaratory judgment proceeding in which the parties seek a determination of their respective rights and duties under a long-term contract for the sale of water from the defendant city to the plaintiff water district. Specifically, the dispute involves the pricing formula of the contract, which provides:

"* * * [T]he [water] District shall pay for water supplied by the City at rates equivalent to the published schedule applicable to outside commercial water users plus the sum of One Dollar ($1.00) each month for each user connected to the District’s water system. The City shall have the right, at its option, to change its published schedule of rates so as to affect the outside commercial schedule of rates to be paid by the District. The City shall bill the District each month for the water used as shown by the master meter for the District and the number of users connected to the system * *

The "master meter” refers to the fact that all water purchased by the water district flows through and is measured by a single meter.

This pricing formula has two components. The water district must monthly pay the city: (1) for the water that passed through the master meter — we call this "the gallon rate,” and (2) an additional $1 for each user connected to the district’s system — we call this "the surcharge.”

This dispute arose when the city increased water rates. The plaintiff water district: (1) concedes the contract authorizes the city to increase the gallon rate, (2) argues the contract does not authorize the city to increase the surcharge, and (3) contends that by imposing what the new rate ordinance calls a "unit service charge” of $8.95 the city has invalidly increased the surcharge. The trial court agreed with the water district. We agree the contract authorizes the city to increase the gallon rate. We assume for present purposes that the contract does not authorize the city to increase the surcharge. Our ultimate disagreement with the water district and the trial court is that we conclude the "unit service charge” is an increase in the gallon rate, not the surcharge.

The rate structure in effect when the contract was executed imposed a "minimum charge” of $6.32 for the first 3,000 gallons consumed in a month. Former Ordinance 329, § 10, as amended by former Ordinance 744. That former rate structure also included the following rule:

"* * * When more than one household * * * is served through a single meter, the charges shall be computed on the basis of equal consumption by each household * * Former Ordinance 329, § 11.

The water district consists of "more than one household * * * served through a single meter,” i.e., what the contract calls the "master meter.” So section 11 of the former rate ordinance required that the first step in computing the water district’s monthly bill was to multiply the "minimum charge” by the number of households served by the water district. To illustrate, if there were 100 households in the water district, the minimum monthly charge for gallons consumed was $632, for which the district was entitled to 300,000 gallons, i.e., 100 times the minimum charge ($6.32) buys 100 times the number of gallons (3,000) covered by the minimum charge.

The new rate — the genesis of the present dispute— is stated as follows:

"BASIC UNIT SERVICE CHARGE FOR EACH UNIT AS DEFINED IN SECTION

l.g. ABOVE........................................................... $ 8.95

"EACH UNIT SHALL RECEIVE 1,000 GALLONS OF WATER FOR THE BASIC UNIT SERVICE CHARGE . . .”

Ordinance 958, § 11.

The new rate ordinance also includes the following definitions:

" 'A Unit’ shall be defined as follows:

Single Family Dwelling.................1 unit per dwelling

* * Ordinance 958, § 1(g).

" 'Unit Service Charge’ shall mean the service charge to each unit connected by single or multiple connections to a meter.” Ordinance 858, § 1(h).

These provisions establish that the "unit service charge” is really a minimum per month per household gallon rate. It applies to each household (or "unit”), regardless of whether serviced through an individual or a shared water meter. It buys the first 1,000 gallons of water used in a month.

Thus, the old and new rate systems express the same fundamental approach in different terms. What used to be called a "minimum charge” is now called a "unit service charge.” And under both the old and new rate ordinances, the water district must pay one "minimum charge” or "unit service charge” for each household served through the single "master meter.” The district is also liable for the separate $1 per month per user surcharge.

Reversed and remanded for entry of a decree consistent with this opinion.