Existing law authorizes any corporation organized for or engaged in the business of selling, distributing, supplying, or delivering water for irrigation purposes, and requires any corporation organized for or engaged in the business of selling, distributing, supplying, or delivering water for domestic use, to provide in its articles or bylaws that water shall be sold, distributed, supplied, or delivered only to owners of its shares and that those shares are appurtenant to certain lands, as specified. Under existing law, these corporations are known as mutual water companies.

This bill would prohibit a mutual water company from charging, issuing a bill, or otherwise seeking to hold tenants of shareholders responsible for the costs of water or its delivery, except for specified tenants, and would require all notices of charges for water to be sent to the last known address of the shareholder or tenant, as applicable, or by electronic mail if the shareholder or tenant, as applicable, has provided and verified the use of an electronic mail address to the company within the last year.

Existing law authorizes a mutual water company that is not a public utility to levy assessments upon its shares, except as provided.

This bill would require a mutual water company that operates a public water system and that proposes to levy an assessment or to increase the charge for water to shareholders by more than 20% to comply with specified notice and public meeting requirements before it seeks to collect the assessment or increase the water charge. The bill would require the mutual water company to prepare a written proposal at least 45 days before a public meeting to adopt a proposal to collect an assessment or to increase a water charge, as specified, and to convene a public meeting regarding the proposal, as provided. The bill would require the mutual water company to provide or send a copy of the written proposal and the notice of the public meeting, at least 45 days beforehand, to specified persons, along with other information, and to also provide or send a copy of the written proposal and the notice to a newspaper of general circulation or another specified communication outlet. The bill would also require the company to post a copy of the written proposal and the notice, at least 45 days beforehand, on the companys internet websites or social media platforms, as applicable. The bill would require the individual votes of board members of the mutual water company on the assessment or the increase of the water charge to be recorded in the minutes of the board meeting. The bill would prohibit the mutual water company from beginning to collect an assessment or increase a water charge earlier than 30 days after the public meeting where the proposed assessment is adopted.

Existing law requires a mutual water company that operates a public water system to make certain records promptly available upon written request to an eligible person, as defined, upon payment of fees covering direct costs of duplication, including, among other documents, agendas and minutes of board meetings and copies of the mutual water companys annual budget and accounting report. Existing law defines eligible persons for purposes of this requirement to include, among others, shareholders of the mutual water company, a person who is an occupant, pursuant to a lease or rental agreement, of commercial space or a dwelling unit to which the mutual water company sells, distributes, supplies, or delivers drinking water, and an elected official of a city or county who represents people who receive drinking water directly from the mutual water company, as specified.

This bill would additionally require a mutual water company to make available to those eligible persons, upon request, a copy of a written proposal to levy an assessment or to increase a water charge. The bill would also include as an eligible person, for purposes of all of the above-described provisions, the chief administrative officer for each city, county, and government water agency in the mutual water companys service area, as specified. The bill would prohibit a mutual water company that provides the requested records in digital form from charging for any duplication costs, as provided.

Existing law authorizes any corporation organized for or engaged in the business of selling, distributing, supplying, or delivering water for irrigation purposes, and requires any corporation organized for or engaged in the business of selling, distributing, supplying, or delivering water for domestic use, to provide in its articles or bylaws that water shall be sold, distributed, supplied, or delivered only to owners of its shares and that those shares are appurtenant to certain lands, as specified. Under existing law, these corporations are known as mutual water companies.

This bill would prohibit a mutual water company from charging, issuing a bill, or otherwise seeking to hold tenants of shareholders responsible for the costs of water or its delivery, except for specified tenants, and would require all notices of charges for water to be sent to the last known address of the shareholder or tenant, as applicable, or by electronic mail if the shareholder or tenant, as applicable, has provided and verified the use of an electronic mail address to the company within the last year.

Existing law authorizes a mutual water company that is not a public utility to levy assessments upon its shares, except as provided.

This bill would require a mutual water company that operates a public water system and that proposes to levy an assessment or to increase the charge for water to shareholders by more than 20% to comply with specified notice and public meeting requirements before it seeks to collect the assessment or increase the water charge. The bill would require the mutual water company to prepare a written proposal at least 45 days before a public meeting to adopt a proposal to collect an assessment or to increase a water charge, as specified, and to convene a public meeting regarding the proposal, as provided. The bill would require the mutual water company to provide or send a copy of the written proposal and the notice of the public meeting, at least 45 days beforehand, to specified persons, along with other information, and to also provide or send a copy of the written proposal and the notice to a newspaper of general circulation or another specified communication outlet. The bill would also require the company to post a copy of the written proposal and the notice, at least 45 days beforehand, on the companys internet websites or social media platforms, as applicable. The bill would require the individual votes of board members of the mutual water company on the assessment or the increase of the water charge to be recorded in the minutes of the board meeting. The bill would prohibit the mutual water company from beginning to collect an assessment or increase a water charge earlier than 30 days after the public meeting where the proposed assessment is adopted.

Existing law requires a mutual water company that operates a public water system to make certain records promptly available upon written request to an eligible person, as defined, upon payment of fees covering direct costs of duplication, including, among other documents, agendas and minutes of board meetings and copies of the mutual water companys annual budget and accounting report. Existing law defines eligible persons for purposes of this requirement to include, among others, shareholders of the mutual water company, a person who is an occupant, pursuant to a lease or rental agreement, of commercial space or a dwelling unit to which the mutual water company sells, distributes, supplies, or delivers drinking water, and an elected official of a city or county who represents people who receive drinking water directly from the mutual water company, as specified.

This bill would additionally require a mutual water company to make available to those eligible persons, upon request, a copy of a written proposal to levy an assessment or to increase a water charge. The bill would also include as an eligible person, for purposes of all of the above-described provisions, the chief administrative officer for each city, county, and government water agency in the mutual water companys service area, as specified. The bill would prohibit a mutual water company that provides the requested records in digital form from charging for any duplication costs, as provided.

Existing law authorizes any corporation organized for or engaged in the business of selling, distributing, supplying, or delivering water for irrigation purposes, and requires any corporation organized for or engaged in the business of selling, distributing, supplying, or delivering water for domestic use, to provide in its articles or bylaws that water shall be sold, distributed, supplied, or delivered only to owners of its shares and that those shares are appurtenant to certain lands, as specified. Under existing law, these corporations are known as mutual water companies.

This bill would prohibit a mutual water company from charging, issuing a bill, or otherwise seeking to hold tenants of shareholders responsible for the costs of water or its delivery, except for specified tenants, and would require all notices of charges for water to be sent to the last known address of the shareholder or tenant, as applicable, or by electronic mail if the shareholder or tenant, as applicable, has provided and verified the use of an electronic mail address to the company within the last year.

Existing law authorizes a mutual water company that is not a public utility to levy assessments upon its shares, except as provided.

This bill would require a mutual water company that operates a public water system and that proposes to levy an assessment or to increase the charge for water to shareholders by more than 20% to comply with specified notice and public meeting requirements at least 30 days before it seeks to collect the assessment or increase the water charge. The bill would require the mutual water company to prepare a written proposal at least 45 days before a public meeting to adopt a proposal to collect an assessment or to increase a water charge, as specified, and to convene a public meeting regarding the proposal, as provided. The bill would require the mutual water company to provide or send a copy of the written proposal and the notice of the public meeting meeting, at least 45 days beforehand, to specified persons, along with other information, and to also provide or send a copy of the written proposal and the notice to a newspaper of general circulation or another specified communication outlet. The bill would also require the company to post a copy of the written proposal and the notice notice, at least 45 days beforehand, on the companys internet websites or social media platforms, as applicable. The bill would require the individual votes of board members of the mutual water company on the assessment or the increase of the water charge to be recorded in the minutes of the board meeting. The bill would prohibit the mutual water company from beginning to collect an assessment or increase a water charge earlier than 30 days after the public meeting where the proposed assessment is adopted.

Existing law requires a mutual water company that operates a public water system to make certain records promptly available upon written request to an eligible person, as defined, upon payment of fees covering direct costs of duplication, including, among other documents, agendas and minutes of board meetings and copies of the mutual water companys annual budget and accounting report. Existing law defines eligible persons for purposes of this requirement to include, among others, shareholders of the mutual water company, a person who is an occupant, pursuant to a lease or rental agreement, of commercial space or a dwelling unit to which the mutual water company sells, distributes, supplies, or delivers drinking water, and an elected official of a city or county who represents people who receive drinking water directly from the mutual water company, as specified.

This bill would additionally require a mutual water company to make available to those eligible persons, upon request, a copy of a written proposal to levy an assessment or to increase a water charge. The bill would also include as an eligible person, for purposes of all of the above-described provisions, the chief administrative officer for each city, county, and government water agency in the mutual water companys service area, as specified. The bill would prohibit a mutual water company that provides the requested records in digital form from charging for any duplication costs, as provided.

Existing law authorizes any corporation organized for or engaged in the business of selling, distributing, supplying, or delivering water for irrigation purposes, and requires any corporation organized for or engaged in the business of selling, distributing, supplying, or delivering water for domestic use, to provide in its articles or bylaws that water shall be sold, distributed, supplied, or delivered only to owners of its shares and that those shares are appurtenant to certain lands, as specified. Under existing law, these corporations are known as mutual water companies.

This bill would prohibit a mutual water company from charging, issuing a bill, or otherwise seeking to hold tenants of shareholders responsible for the costs of water or its delivery, except for specified tenants, and would require all notices of charges for water to be sent to the last known address of the shareholder or tenant, as applicable. applicable, or by electronic mail if the shareholder or tenant, as applicable, has provided and verified the use of an electronic mail address to the company within the last year.

Existing law authorizes a mutual water company that is not a public utility to levy assessments upon its shares, except as provided.

This bill would require a mutual water company that operates a public water system and that proposes to levy an assessment or to increase the charge for water to shareholders by more than 20% to comply with specified notice and public meeting requirements at least 30 days before it seeks to collect the assessment or increase the water charge. The bill would require the mutual water company to prepare a written proposal to collect an assessment or to increase a water charge, as specified, and to convene a public meeting regarding the proposal, as provided. The bill would require the mutual water company to provide or send a copy of the written proposal and the notice of the public meeting to specified persons, along with other information, and to also provide or send a copy of the written proposal and the notice of the public meeting to certain newspapers and radio stations. to a newspaper of general circulation or another specified communication outlet. The bill would also require the company to post a copy of the written proposal and the notice on the companys internet websites or social media platforms, as applicable. The bill would require the individual votes of board members of the mutual water company on the assessment or the increase of the water charge to be recorded in the minutes of the board meeting.

Existing law requires a mutual water company that operates a public water system to make certain records promptly available upon written request to an eligible person, as defined, upon payment of fees covering direct costs of duplication, including, among other documents, agendas and minutes of board meetings and copies of the mutual water companys annual budget and accounting report. Existing law defines eligible persons for purposes of this requirement to include, among others, shareholders of the mutual water company, a person who is an occupant, pursuant to a lease or rental agreement, of commercial space or a dwelling unit to which the mutual water company sells, distributes, supplies, or delivers drinking water, and an elected official of a city or county who represents people who receive drinking water directly from the mutual water company, as specified.

This bill would additionally require a mutual water company to make available to those eligible persons, upon request, a copy of the current list of shareholders, including all contact information, and a copy of a written proposal to levy an assessment or to increase a water charge. The bill would also include as an eligible person, for purposes of all of the above-described provisions, the chief administrative officer for each city, county, and government water agency in the mutual water companys service area, as specified. The bill would prohibit a mutual water company that provides the requested records in digital form from charging for any duplication costs, as provided.

Existing law authorizes any corporation organized for or engaged in the business of selling, distributing, supplying, or delivering water for irrigation purposes, and requires any corporation organized for or engaged in the business of selling, distributing, supplying, or delivering water for domestic use, to provide in its articles or bylaws that water shall be sold, distributed, supplied, or delivered only to owners of its shares and that those shares are appurtenant to certain lands, as specified. Under existing law, these corporations are known as mutual water companies.

This bill would prohibit a mutual water company from charging, issuing a bill, or otherwise seeking to hold tenants of shareholders responsible for the costs of water or its delivery delivery, except for specified tenants, and would require all notices of charges for water to be sent to the shareholders at their last known address. the last known address of the shareholder or tenant, as applicable.

Existing law authorizes a mutual water company that is not a public utility to levy assessments upon its shares, except as provided.

This bill would require a mutual water company that operates a public water system and that proposes to levy an assessment or to increase the charge for water to shareholders by more than 20% to comply with specified notice and public meeting requirements at least 30 days before it seeks to collect the assessment or increase the water charge. The bill would require the mutual water company to prepare a written proposal to collect an assessment or to increase a water charge, as specified, and to convene a public meeting regarding the proposal, as provided. The bill would require the mutual water company to send a copy of the written proposal and the notice of the public meeting to specified persons, along with other information, and to also send a copy of the written proposal and the notice of the public meeting to certain newspapers and radio stations.

Existing law requires a mutual water company that operates a public water system to make certain records promptly available upon written request to an eligible person, as defined, upon payment of fees covering direct costs of duplication, including, among other documents, agendas and minutes of board meetings and copies of the mutual water companys annual budget and accounting report. Existing law defines eligible persons for purposes of this requirement to include, among others, shareholders of the mutual water company, a person who is an occupant, pursuant to a lease or rental agreement, of commercial space or a dwelling unit to which the mutual water company sells, distributes, supplies, or delivers drinking water, and an elected official of a city or county who represents people who receive drinking water directly from the mutual water company, as specified.

This bill would additionally require a mutual water company to make available to those eligible persons, upon request, a copy of the current list of shareholders, including all contact information, and a copy of a written proposal to levy an assessment or to increase a water charge. The bill would also include as an eligible person, for purposes of all of the above-described provisions, the chief administrative officer for each city, county, and government water agency in the mutual water companys service area, as specified. The bill would prohibit a mutual water company that provides the requested records in digital form from charging for any duplication costs, as provided.

Existing law, the California Emergency Services Act, requires all public water systems, as defined, with 10,000 or more service connections to review and revise their disaster preparedness plans in conjunction with related agencies, including, but not limited to, local fire departments and the Office of Emergency Services, to ensure that the plans are sufficient to address possible disaster scenarios. A person, as defined, who violates the provisions of this act is guilty of a misdemeanor.

Existing law requires these public water systems, following a declared state of emergency, to furnish an assessment of their emergency response and recommendations to the Legislature within 6 months after each disaster, and to implement the recommendations in a timely manner. Existing law requires the office to establish emergency response and recovery plans in coordination with these public water systems.

Existing law, the California Safe Drinking Water Act, requires the State Water Resources Control Board to administer provisions relating to the regulation of drinking water to protect public health.

This bill would require a disaster-impacted public water system, as defined, to conduct a disaster impact assessment within 6 months of a disaster, in coordination with the disaster-impacted county, as defined, before receiving state funding. The bill would require the assessment to include specified components, including determining whether the best interest of the affected residences, as defined, requires becoming a consolidated water system in order to ensure access to quality water and adequate supply, as provided. The bill would require the assessment to be provided to the State Water Resources Control Board. The bill would require a disaster-impacted public water system, in coordination with the disaster-impacted county, to adopt specified requirements into its assessment process, including making the coordinating bodies subject to the California Public Records Act, providing the opportunity for public comment, and arranging for live translations, as provided. Because a violation of these requirements by certain public water systems would constitute a misdemeanor, the bill would expand the scope of a crime, thereby imposing a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

 UNFINISHED BUSINESS  

Bill No: SB 1417

Author: Pérez (D), et al.

Amended: 8/18/26

Vote: 21

SENATE ENERGY, U. & C. COMMITTEE: 13-2, 4/13/26

AYES: Allen, Archuleta, Arreguín, Becker, Caballero, Gonzalez, Hurtado, McNerney, Reyes, Richardson, Rubio, Stern, Wahab

NOES: Ochoa Bogh, Strickland

NO VOTE RECORDED: Dahle, Grove

SENATE FLOOR: 30-9, 5/19/26

AYES: Allen, Archuleta, Arreguín, Ashby, Becker, Blakespear, Cabaldon, Caballero, Cervantes, Cortese, Durazo, Gonzalez, Grayson, Hurtado, Laird, Limón, McGuire, McNerney, Menjivar, Padilla, Pérez, Reyes, Richardson, Rubio, Smallwood-Cuevas, Stern, Umberg, Wahab, Weber Pierson, Wiener

NOES: Alvarado-Gil, Choi, Dahle, Grove, Jones, Ochoa Bogh, Seyarto, Strickland, Valladares

NO VOTE RECORDED: Niello

ASSEMBLY FLOOR: Passed, 8/24/26

SUBJECT: Mutual water companies: assessments and water charges: notice

SOURCE: Author

DIGEST:

This bill includes various provisions to provide greater transparency and public notice requirements regarding proposed water charge increases by mutual water companies.

Assembly Amendments

expand the options for public notice of proposed rate increases to include electronic mail; delete the requirement to disclose a shareholder list; clarify the shareholder rights to inspect the mutual water company’s books; expand the facilities that can be used for a public meeting by authorizing the mutual water company to use the largest publicly accessible facility available; provide additional flexibility to the dissemination of the public notice for the proposed water charge increase; and clarify the timing of the notice requirements and the timing by when the mutual water company can begin collecting an approved charge.

ANALYSIS:

Existing law:

1. Establishes and vests the California Public Utilities Commission (CPUC) with regulatory over public utilities, including water corporations. (Article XII of the California Constitution)
2. Provides that any person, firm, or corporation, their lessees, trustees, receivers or trustees appointed by any court whatsoever, owning, controlling, operating, or managing any water system within this State, who sells, leases, rents, or delivers water to any person, firm, corporation, municipality, or any other political subdivision of the State, whether under contract or otherwise, is a public utility, and is subject to the jurisdiction, control, and regulation of the CPUC, except as otherwise provided. (Public Utilities Code §2701)
3. Provides that any corporation or association which is organized for the purpose of delivering water solely to its stockholders or members at cost, and which delivers water to others than its stockholders or members, or to the state or any department or agency thereof or any school district, or to any other mutual water company, for compensation, is a public utility and is subject to the jurisdiction, control, and regulation of the CPUC. (Public Utilities Code §2702)
4. Provides that any corporation or association that is organized for the purposes of delivering water to its stockholders and members at cost, including use of works for conserving, treating, and reclaiming water, and that delivers water to no one except its stockholders or members, or to the state or any agency or department thereof, to any city, county, school district, or other public district, or any federal agency that provides fire protection or operates park facilities, or to any other mutual water company, at cost, is not a public utility, and is not subject to the jurisdiction, control or regulation of the CPUC. Authorizes a mutual water company to perform specified acts without becoming a public utility and becoming subject to the jurisdiction, control or regulation of the CPUC, including delivering water at cost to any lessee of its stock or shares or other evidence of membership where the lease is in writing signed by the owner of the stock or shares or other evidence of membership and the lessee thereof and approved by the mutual water company. Requires all leases and contracts to be preserved for a period of 10 years by a mutual water company and subject to inspection by the CPUC. Defines the term “cost” as used in this to mean without profit. (Public Utilities Code §2705)
5. Authorizes a mutual water company organized for or engaged in the business of selling, distributing, supplying, or delivering water for irrigation purposes, and requires a mutual water company organized for or engaged in the business of selling, distributing, supplying, or delivering water for domestic use, to provide in its articles or bylaws that water shall be sold, distributed, supplied, or delivered only to owners of its shares and that those shares are appurtenant to certain lands, as specified. (Corporations Code §14300)
6. Authorizes a mutual water company that is not a public utility to levy assessments upon its shares, whether or not they are fully paid, unless otherwise provided in its articles or bylaws. Provides that the right to receive water or dividends may be denied and may be sold and transferred without those lands as if not appurtenant, if any shares of the corporation that have been made appurtenant to any land become delinquent in the payment of assessments. Requires the purchaser to acquire the right to receive water as provided in the articles or bylaws of the corporation, or they may be forfeited to the corporation. (Corporations Code §14303)
7. Requires, pursuant to the Mutual Water Company Open Meeting Act, a board of directors of a mutual water company that operates a public water system to allow an eligible person, as defined, to personally attend a meeting of the board, if the eligible person gave the board at least 24 hours’ advance written notice of their intent to personally attend the meeting. Authorizes the board to allow an eligible person who was denied attendance at a meeting for failure to provide this notice, or because the number of eligible persons having already provided notice of attendance exceeds the room capacity of the place of the meeting, to attend the meeting by teleconference. Requires the board to provide an eligible person attending a meeting by teleconference a copy of the documents to be discussed at the meeting, except as specified. (Corporations Code §14305)
8. Defines “eligible persons” for purposes of the Mutual Water Company Open Meeting Act to include, among others, shareholders of the mutual water company, a person who is an occupant, pursuant to a lease or rental agreement, of commercial space or a dwelling unit to which the mutual water company sells, distributes, supplies, or delivers drinking water, and an elected official of a city or county who represents people who receive drinking water directly from the mutual water company, as specified. (Corporations Code §14305(o))
9. Requires a mutual water company that operates a public water system to make certain records promptly available upon written request to an eligible person, as defined, upon payment of fees covering direct costs of duplication, including, among other documents, agendas and minutes of board meetings and copies of the mutual water company’s annual budget and accounting report. (Corporations Code §14307)

This bill:

1. Prohibits a mutual water company from charging, issuing a bill, or otherwise seeking to hold tenants of shareholders responsible for the costs of water or its delivery, except for specified tenants, and requires all notices of charges for water to be sent to the shareholders at their last known address of the shareholder or tenant, as applicable, or by electronic mail if the shareholder or tenant has provided and verified the use of an electronic mail address to the mutual water company within the last year.
2. Requires a mutual water company that operates a public water system and that proposes to levy an assessment or to increase the charge for water to shareholders by more than 20% to comply with specified notice and public meeting requirements:
   1. Requires the mutual water company to prepare a written proposal at least 45 days before a public meeting to adopt a proposal to collect an assessment or to increase a water charge, as specified, and to convene a public meeting regarding the proposal, as provided.
   2. Requires the mutual water company to provide or send a copy of the written proposal and the notice of the public meeting, at least 45 days beforehand, to specified persons, along with other information, and to also provide or send a copy of the written proposal and the notice of the public meeting to certain newspapers and radio stations.
   3. Requires the mutual water company to post a copy of the written proposal and the notice, at least 45 days beforehand, on the company’s internet websites or social media platforms, as applicable.
   4. Requires the individual votes of board members of the mutual water company on the assessment or the increase of the water charge to be recorded in the minutes of the board meeting.
   5. Prohibits the mutual water company from beginning to collect an assessment or increase a water charge earlier than 30 days after the public meeting where the proposed assessment is adopted.
3. Requires a mutual water company to make available to eligible persons, upon request a copy of a written proposal to levy an assessment or to increase a water charge. Includes as an eligible person, for purposes of all of the above-described provisions, the chief administrative officer for each city, county, and government water agency in the mutual water company’s service area, as specified. Prohibits a mutual water company that provides the requested records in digital form from charging for any duplication costs, as provided.

Background

Mutual water companies. Mutual water companies are private not-for-profit organizations of shareholder-owned water systems organized under Corporations Code §14300 et seq. According to the California Association of Mutual Water Companies (CalMutuals), over 1,000 of these companies operate in the state, serving 1.3 million Californians in rural and pockets of urban and suburban areas. Some of these water companies date back to the 1800’s when they constructed irrigation channels and installed pumps to distribute water to shareholder-owned properties, at the time in largely rural areas, while others date back to the mid-1900’s as housing was being built in formerly rural areas. Over time, mutual water companies gave way to municipally owned water departments governed by local elected officials and investor-owned water utilities that are economically regulated by the CPUC. However, mutual water companies are governed by their shareholders, via a board (often of volunteers) who set service charges. Shareholders are property owners who receive service and hold shares and liability for the integrity of the water system, including assessments to cover the costs to maintain the systems. Similar to other water utilities, mutual water companies are also subject to water quality regulations by the State Water Resources Control Board.

Eaton Fire impacts on mutual water companies. The Southern California January 2025 Eaton Fire killed 31 people and forced more than 200,000 to evacuate the area, destroyed 18,000 homes and structures, and burned nearly 60,000 acres of land. The fire also impacted water systems serving the community, including three mutual water companies in Altadena: Las Flores Water Company, Lincoln Avenue Water Company, Rubio Cañon Land and Water Association, who serve most residents and businesses in Altadena. These water companies had varying degrees of insurance to help them rebuild the infrastructure to restore service. The ability of the affected mutual water company to recover costs also rests on continuing to provide service to customers, which can be affected by the pace of the return of the customer base to the impacted area (including the numerous structures that need to be rebuilt).

Comments

Mutual water companies seek rate increases to recover from the Eaton Fire. In order to restore service, each of the mutual water companies have sought water charge increases to financially recover from the Eaton Fire. The author’s office contends the companies have done so without consistent timelines of outreach to shareholders, including advanced notification lacking clear information about the details for a public forum to discuss proposed charges. The author’s office provided the following information concerning rate and assessment increases:

Las Flores Water Company:

• Applied a $3,000 fee for standing homes, and to destroyed homes once rebuilt.^[1]
• The charge appeared to be presented in the October 2025 and January 2026 board meetings, which discussed plans for wildfire recovery, but no advanced notice of a prospective rate increase to advertise these meetings was provided in advance to shareholders.^[2] Ultimately, nearly 200 shareholders demanded answers and expressed frustration and concern over these proposed charges.^[3]
• A written notification dated March 2026 indicated that the charge was adopted by the board on their February 5^th meeting to be applied on April 1, 2026.^[4]

Rubio Cañon Land and Water Association:

• Proposed an 11% rate increase, and fire recovery fee of up to $30 a month.^[5]
• A March 18^th notice indicated that charge will be applied May 1^st with reference to rate adjustments being discussed at a February 3^rd special meeting, but no advanced notification for shareholders to know that a rate increase would be discussed appeared to be found.^[6]

Lincoln Avenue Water Company:

• Adopted a $15 rate increase that took effect in March 2026 and considered imposing an additional fee.^[7]
• No advanced notification to specifically highlight or discuss the rate increase appeared to be found but a letter was reportedly sent after the decision was made, and the company’s website did not provide further details about any forum or agenda.^[8]

Bill seeks greater public notification and transparency concerning proposed increases to charges and assessments. This bill proposes greater notification of proposed increases in water service charges and assessments by mutual water companies. The author’s office has shared that survivors from the Eaton Fire are dealing with increased costs to rebuild their homes, and communities, including costs from the rebuilding of the mutual water company systems. They share the need for greater transparency by mutual water companies as residents have been surprised by the increased costs being placed on them by these companies. The author’s office notes there is a lack of more visible and advanced notifications about proposed rate changes.

Tenant/occupant billing. Under current law in both the Public Utilities Code and Corporations Code, mutual water companies are limited in who they can bill for services, largely restricted to their shareholders, otherwise they may risk becoming a public utility subject to the regulatory authority of the CPUC. However, there are exceptions where a mutual water company is authorized to provide water at cost without becoming a public utility, such as in the instance of addressing a fire or other emergencies. An additional exception provides that when a shareholder enters into a lease agreement with an occupant and the lease agreement is provided to the mutual water company, the mutual water company can bill the occupant. The law requires the mutual water company to maintain the lease agreements for 10 years and makes them subject to the inspection of the CPUC. The bill prohibits billing tenants for water service. However, amendments taken in the policy committee attempt to address the authorized exception in the law, by authorizing mutual water companies to bill tenants where they are authorized by Public Utilities Code Section 2705. Given the need to help the community rebuild, the continued ability of utility providers to collect charges for water service, including from tenants who agreed to these arrangements, can support efforts to restore utility service more quickly, while still protecting customers who have not agreed to these arrangements from being unfairly billed.

Related/Prior Legislation

SB 1291 (Gonzalez, 2026) required specified actions of mutual water companies and their boards, including providing teleconferencing for certain companies, and adopt an annual budget, among other requirements. The bill was held by the Senate Appropriations Committee.

AB 240 (Rendon, Chapter 633, Statutes of 2013) required mutual water companies to comply with open meeting, public record, audit, and budget requirements and allows them to impose liens to collect unpaid charges.

FISCAL EFFECT: Appropriation: No Fiscal Com.: No Local: No

SUPPORT: (Verified 8/19/26)

Altadena CoLab

Amigos de Los Rios

Central California Environmental Justice Network

Clean Water Action

Communities for a Better Environment

Community 3.0x

Community Water Center

County of Los Angeles

Designing Resilience

Eaton Fire Residents United

Green Circle SGV

Leadership Counsel for Justice and Accountability

Physicians for Social Responsibility Los Angeles

Soul Force Project

OPPOSITION: (Verified 8/19/26)

None received

ARGUMENTS IN SUPPORT: According to the author’s office:

In a joint meeting facilitated by the Altadena Coalition of Neighborhood Associations, the companies fielded questions about these water rate increases among other charges facing fire survivors. Some residents have still received water service charges from the time of the Eaton Fire although their property was destroyed. This dynamic underscores the need for state law to ensure consistent requirements for how mutual water companies provide advanced notification and a meeting for shareholders specifically if they are proposing a rate increase to ensure appropriate shareholder notice and feedback prior to adoption.

Prepared by: Nidia Bautista / E., U. & C. / (916) 651-4107

8/24/26 17:14:59

**** END ****

1. https://laist.com/brief/news/climate-environment/las-flores-water-company-altadena-whats-happening-and-why ↑

2. https://lasfloreswaterco.com/documents/lfwc-Fire-Assessment-Letter-2026.pdf ↑

3. https://www.sgvtribune.com/2026/02/13/in-the-pipeline-altadena-utility-customers-to-see-water-rate-increases-in-2026-amid-fire-recovery/ ↑

4. https://lasfloreswaterco.com/documents/lfwc-Fire-Assessment-Letter-2026.pdf ↑

5. https://www.pasadenastarnews.com/2026/02/13/in-the-pipeline-altadena-utility-customers-to-see-water-rate-increases-in-2026-amid-fire-recovery/ ↑

6. https://www.rclwa.org/uploads/files/LatestNews/2026%20Rate%20Increase.pdf ↑

7. https://pasadenanow.com/main/another-altadena-water-company-calls-shareholder-meeting-to-address-eaton-fire-financial-woes ↑

8. https://www.sgvtribune.com/2026/02/13/in-the-pipeline-altadena-utility-customers-to-see-water-rate-increases-in-2026-amid-fire-recovery/ ↑

SENATE THIRD READING

STR Bill Id:SB 1417

Author:(Pérez)

As Amended Ver:August 18, 2026

Majority vote

SUMMARY

Establishes additional transparency, public notice, and meeting requirements, including specified notice and collection timelines, for mutual water companies (MWCs) proposing to levy an assessment or increase water charges by more than 20%.

Major Provisions

1. Removes the requirement that MWCs comply with the notice and public meeting requirements at least 30 days before collecting an assessment or increased water charge.
2. Requires the written proposal to be prepared at least 45 days before the public meeting to adopt the proposal.
3. Requires the written proposal and notice to be provided and posted at least 45 days before the public meeting to adopt the proposal.
4. Prohibits collection of an assessment or increased water charge earlier than 30 days after the public meeting in which the proposed assessment is adopted.
5. Makes non-substantive and conforming changes for clarity purposes.

COMMENTS

MWCs are private corporations organized as either nonprofit mutual benefit corporations or general corporations that provide water service exclusively to their shareholders. In companies that supply domestic water, shares are generally tied to a specific property, and ownership of that property includes the right to receive water service. More than 1,000 MWCs serve an estimated 1.3 million Californians across rural, suburban, and urban communities.

Unlike investor-owned utilities, MWCs are governed by boards of directors elected by shareholders, who fund the operation, maintenance, and improvement of the water system through water charges and assessments. While some MWCs are managed by shareholder-volunteers, others employ full-time staff. Smaller companies often face challenges related to aging infrastructure and limited access to capital for system improvements.

Although generally exempt from the California Public Utilities Commission (CPUC) regulation, MWCs remain subject to state and federal oversight. Companies with 200 or more service connections are regulated by the State Water Resources Control Board's Division of Drinking Water, while smaller systems are typically overseen by county health departments. MWCs are further subject to the federal Safe Drinking Water Act.

Need for this Bill. Unlike public water agencies, MWCs are not subject to Proposition 218's notice and public participation requirements for certain rate increases. While current law requires specified open meeting, recordkeeping, and budget practices, it does not establish uniform notice or public meeting requirements before significant assessments or water charge increases are considered. According to the author, during the Eaton Fire recovery, shareholders did not always receive advance notice of when proposed assessments and water charge increases would be discussed or adopted.

Therefore, SB 1417 builds upon the existing governance and meeting requirements applicable to MWCs. Specifically, the bill establishes additional transparency, notice, and public meeting requirements for MWCs that propose to levy an assessment or increase water charges by more than 20%.

As part of these requirements, MWCs must prepare a written proposal and provide notice at least 45 days before the public meeting. The proposal and notice must also be posted on company websites or social media platforms, as applicable, at least 45 days before the meeting. Following the meeting, an MWC may not begin collecting an assessment or increased water charge for at least 30 days.

In addition, the bill requires individual board member votes to be recorded in the meeting minutes, expands the categories of persons eligible to receive certain notices and request company records, and prohibits MWCs from billing most tenants directly for water service.

According to the Author

According to the author, "California is served by public and private water service providers, including mutual water companies that operate as small, private nonprofit corporations. Unlike public water providers, mutual water companies are not automatically subject to standard transparency requirements. Prior legislation extended Brown Act-style transparency requirements to these entities (Chapter 633, Statutes of 2013). Public agencies are also subject to Proposition 218, which. requires advanced customer notification and engagement when rate changes are proposed. However, these requirements do not apply to mutual water companies, meaning their shareholders are not guaranteed advance notice or a forum to speak before a mutual water company's board raises water service prices. This impact of a lack of advanced notice and transparency for mutual water company shareholders is highlighted in Altadena, were the three mutual water companies have sought rate increases following Eaton Fire without abiding by standard advanced outreach and public forum standards. SB 1417 addresses this gap by setting the necessary advanced shareholder notification and public meeting requirements before a rate increase exceeding 20% is applied by a mutual water company."

Arguments in Support

Supporters, including the County of Los Angeles, environmental justice, public health, and community organizations, state that the bill would strengthen transparency by improving notice requirements for significant assessments and water charge increases, expanding access to company records, and providing communities with more information about decisions affecting their water service. They further contend that the need for improved notice became especially apparent following the Eaton Fire, when some displaced residents reportedly did not receive notice of proposed assessments and water charge increases.

Arguments in Opposition

None on file.

FISCAL COMMENTS

Unknown. This bill is keyed non-fiscal by the Legislative Counsel.

VOTES

SENATE FLOOR: 30-9-1

YES: Allen, Archuleta, Arreguín, Ashby, Becker, Blakespear, Cabaldon, Caballero, Cervantes, Cortese, Durazo, Gonzalez, Grayson, Hurtado, Laird, Limón, McGuire, McNerney, Menjivar, Padilla, Pérez, Reyes, Richardson, Rubio, Smallwood-Cuevas, Stern, Umberg, Wahab, Weber Pierson, Wiener

NO: Alvarado-Gil, Choi, Dahle, Grove, Jones, Ochoa Bogh, Seyarto, Strickland, Valladares

ABS, ABST OR NV: Niello

ASM UTILITIES AND ENERGY: 14-0-4

YES: Petrie-Norris, Boerner, Calderon, Davies, Mark González, Harabedian, Hart, Irwin, Kalra, Papan, Rogers, Schiavo, Schultz, Ta

ABS, ABST OR NV: Patterson, Chen, Wallis, Zbur

UPDATED

VERSION: August 18, 2026

CONSULTANT: Lina V. Malova / U. & E. / (916) 319-2083 FN: 0003781

SENATE THIRD READING

STR Bill Id:SB 1417

Author:(Pérez)

As Amended Ver:June 29, 2026

Majority vote

SUMMARY

Establishes additional transparency and public notice requirements for mutual water companies (MWCs) proposing to levy an assessment or increase water charges by more than 20%.

Major Provisions

1. Requires MWCs that operate public water systems and propose to levy an assessment or to increase the charge for water to shareholders by more than 20% to comply with specified notice and public meeting requirements at least 30 days before it seeks to collect the assessment or increase the water charge.
2. Prohibits MWCs from charging, issuing a bill, or otherwise seeking to hold tenants of shareholders responsible for the costs of water or its delivery, except for specified tenants.
3. Requires all notices of charges for water to be sent to the last known address of the shareholder or tenant, as applicable, or by electronic mail if the shareholder or tenant, as applicable, has provided and verified the use of an electronic mail address to the company within the last year.
4. Requires MWCs to prepare a written proposal to collect an assessment or to increase a water charge, as specified, and to convene a public meeting regarding the proposal, as provided.
5. Requires MWCs to provide or send a copy of the written proposal and the notice of the public meeting to specified persons, along with other information, and to also provide or send a copy of the written proposal and the notice to a newspaper of general circulation or another specified communication outlet.
6. Requires MWCs to post a copy of the written proposal and the notice on the company′s internet websites or social media platforms, as applicable.
7. Requires the individual votes of board members of the MWC on the assessment or the increase of the water charge to be recorded in the minutes of the board meeting.
8. Includes, as an eligible person entitled to request MWC records and receive assessment or rate-increase notices, the chief administrative officer for each city, county, and government water agency in the mutual water company′s service area, as specified.
9. Requires MWCs to make available to eligible persons, upon request, a copy of a written proposal to levy an assessment or to increase a water charge.

COMMENTS

Mutual Water Companies (MWCs). MWCs are private corporations organized as either nonprofit mutual benefit corporations or general corporations that provide water service exclusively to their shareholders. In companies that supply domestic water, shares are generally tied to a specific property, and ownership of that property includes the right to receive water service. More than 1,000 MWCs serve an estimated 1.3 million Californians across rural, suburban, and urban communities.

Unlike investor-owned utilities, MWCs are governed by boards of directors elected by shareholders, who fund the operation, maintenance, and improvement of the water system through water charges and assessments. While some MWCs are managed by shareholder-volunteers, others employ full-time staff. Smaller companies often face challenges related to aging infrastructure and limited access to capital for system improvements.

Although generally exempt from the California Public Utilities Commission (CPUC) regulation, MWCs remain subject to state and federal oversight. Companies with 200 or more service connections are regulated by the State Water Resources Control Board′s Division of Drinking Water, while smaller systems are typically overseen by county health departments. MWCs are further subject to the federal Safe Drinking Water Act.

Need for this Bill. Unlike public water agencies, MWCs are not subject to Proposition 218′s notice and public participation requirements for certain rate increases. While current law requires specified open meeting, recordkeeping, and budget practices, it does not establish uniform notice or public meeting requirements before significant assessments or water charge increases are considered. According to the author, during the Eaton Fire recovery, shareholders did not always receive advance notice of when proposed assessments and water charge increases would be discussed or adopted.

Therefore, this bill builds upon the existing governance and meeting requirements applicable to MWCs. Specifically, the bill establishes additional transparency, notice, and public meeting requirements for MWCs that propose to levy an assessment or increase water charges by more than 20%. These requirements include preparing a written proposal, providing advance notice, holding a public meeting, and posting proposal materials on company websites or social media platforms, as applicable. In addition, the bill requires board members′ individual votes to be recorded in the meeting minutes, expands the categories of persons eligible to receive certain notices and request company records, and prohibits mutual water companies from billing most tenants directly for water service.

According to the Author

According to the author, ″California is served by public and private water service providers, including mutual water companies that operate as small, private nonprofit corporations. Unlike public water providers, mutual water companies are not automatically subject to standard transparency requirements. Prior legislation extended Brown Act-style transparency requirements to these entities [AB 240 (Rendon)] Chapter 633, Statutes of 2013. Public agencies are also subject to Proposition 218, which requires advanced customer notification and engagement when rate changes are proposed. However, these requirements do not apply to mutual water companies, meaning their shareholders are not guaranteed advance notice or a forum to speak before a mutual water company′s board raises water service prices. This impact of a lack of advanced notice and transparency for mutual water company shareholders is highlighted in Altadena, were the three mutual water companies have sought rate increases following Eaton Fire without abiding by standard advanced outreach and public forum standards. SB 1417 addresses this gap by setting the necessary advanced shareholder notification and public meeting requirements before a rate increase exceeding 20% is applied by a mutual water company.″

Arguments in Support

Supporters, including the County of Los Angeles, environmental justice, public health, and community organizations, state that the bill would strengthen transparency by improving notice requirements for significant assessments and water charge increases, expanding access to company records, and providing communities with more information about decisions affecting their water service. They further contend that the need for improved notice became especially apparent following the Eaton Fire, when some displaced residents reportedly did not receive notice of proposed assessments and water charge increases.

Arguments in Opposition

The California Association of Mutual Water Companies (CalMutuals) questions the bill′s expansion of the entities eligible to inspect mutual water company records to include government water agencies located within five miles of the company′s service area. They argue that, unlike shareholders, tenants, and certain elected officials who are directly affected by a mutual water company′s operations, neighboring water agencies generally have no governance, ownership, or oversight relationship with the company and therefore should not receive expanded access to company records.

FISCAL COMMENTS

Unknown. According to the Senate Committee on Appropriations, the bill is expected to have negligible costs pursuant to Senate Rule 28.8.

VOTES

SENATE FLOOR: 30-9-1

YES: Allen, Archuleta, Arreguín, Ashby, Becker, Blakespear, Cabaldon, Caballero, Cervantes, Cortese, Durazo, Gonzalez, Grayson, Hurtado, Laird, Limón, McGuire, McNerney, Menjivar, Padilla, Pérez, Reyes, Richardson, Rubio, Smallwood-Cuevas, Stern, Umberg, Wahab, Weber Pierson, Wiener

NO: Alvarado-Gil, Choi, Dahle, Grove, Jones, Ochoa Bogh, Seyarto, Strickland, Valladares

ABS, ABST OR NV: Niello

ASM UTILITIES AND ENERGY: 14-0-4

YES: Petrie-Norris, Boerner, Calderon, Davies, Mark González, Harabedian, Hart, Irwin, Kalra, Papan, Rogers, Schiavo, Schultz, Ta

ABS, ABST OR NV: Patterson, Chen, Wallis, Zbur

UPDATED

VERSION: June 29, 2026

CONSULTANT: Lina V. Malova / U. & E. / (916) 319-2083 FN: 0003307

Date of Hearing: June 24, 2026

ASSEMBLY COMMITTEE ON UTILITIES AND ENERGY

Cottie Petrie-Norris, Chair

SBPCA Bill Id:SB 1417

Author:(Pérez) – As Amended Ver:April 23, 2026

SENATE VOTE: 30-9

SUBJECT: Mutual water companies: assessments and water charges: notice

SUMMARY: Establishes additional transparency and public notice requirements for mutual water companies proposing to levy an assessment or increase water charges by more than 20%. Specifically, this bill:

1. Prohibits a mutual water company from charging, issuing a bill, or otherwise seeking to hold tenants of shareholders responsible for the costs of water or its delivery, except for tenants, as provided in Section 2705 of the Public Utilities Code, where the tenant is a lessee of the corporation’s shares or stock, or the tenant is a lessee of land of a shareholder, and the corporation has approved the lease.
2. Requires all notices of charges for water to be sent to the last known address of the shareholder or tenant, as applicable.
3. Requires mutual water companies that operate a public water system and propose to levy an assessment or raise water charges by more than 20% to do all of the following at least 30 days before collecting:
4. Prepare a written proposal specifying the amount, the basis, necessity for, and use of the funds, and which board members voted for the proposal to levy an assessment or raise water charges;
5. Convene a public meeting in a city or county building accommodating at least 100 participants, located within five miles of the service area or in a facility serving a county government that includes the service area;
6. Send the written proposal and meeting notice at least 45 days before the meeting to all eligible persons and to general-circulation newspapers and radio stations serving the county;
7. Include in the shareholder notice specified language on their right to vote for the board, participate in board meetings, and receive information about company and water system operations; and
8. Include in the notice to non-shareholder eligible persons, such as tenants and local officials, specified language on their right to participate and obtain copies of company documents, including minutes, budget, accounting report, water quality records, annual report, shareholder list, and the written proposal.
9. Requires a mutual water company to make available to eligible persons, on request, the current shareholder list, including contact information, and any written proposal for an assessment or rate increase. Includes the chief administrative officer of each city, county, and government water agency in or within five miles of the service area within the definition of "eligible person."
10. Prohibits a mutual water company from charging duplication fees when records are provided digitally.

EXISTING LAW:

1. Authorizes corporations, known as “mutual water companies,” organized to provide irrigation water. Requires corporations organized to provide domestic water service to distribute water only to their shareholders. Requires that shares be appurtenant to specified parcels of land, such that ownership of the property generally carries with it ownership of the water company share. (Corporations Code §14300)
2. Authorizes a mutual water company that is not a public utility to levy assessments upon its shares, except as provided. (Corporations Code §14303)
3. Requires the board of directors of a mutual water company that operates a public water system to allow an eligible person to attend a board meeting if the person provides at least 24 hours' advance written notice of their intent to attend. Authorizes attendance by teleconference if an eligible person is denied attendance for failure to provide notice or because attendance exceeds room capacity and requires the board to provide teleconference participants with copies of documents to be discussed at the meeting, as specified. (Corporations Code §14305)
4. Defines, for the purposes of the above requirement, “eligible persons” to include, among others, shareholders of the mutual water company; a person who is an occupant, pursuant to a lease or rental agreement, of commercial space or a dwelling unit to which the mutual water company sells, distributes, supplies, or delivers drinking water; and an elected official of a city or county who represents people who receive drinking water directly from the mutual water company, as specified. (Corporations Code §14305(o))
5. Requires a mutual water company that operates a public water system to make certain records promptly available upon written request to an eligible person, as defined, upon payment of fees covering direct costs of duplication, including, among other documents, agendas and minutes of board meetings and copies of the mutual water company’s annual budget and accounting report. (Corporations Code §14307)
6. Provides that any person, firm, or corporation that owns, controls, operates, or manages a water system and sells or delivers water is a public utility subject to the jurisdiction, control, and regulation of the California Public Utilities Commission (CPUC), except as otherwise provided. (Public Utilities Code §2701)
7. Provides that a mutual water company that delivers water at cost to its shareholders or members is not a public utility and is not subject to the jurisdiction, control, or regulation of the CPUC. Authorizes a mutual water company to engage in specified activities, including delivering water at cost to lessees of its shares, without becoming a public utility. Requires certain leases and contracts to be retained for 10 years and made available for CPUC inspection. Defines “cost” to mean without profit. (Public Utilities Code §2705)

FISCAL EFFECT: Unknown. According to the Senate Committee on Appropriations, the bill is expected to have negligible costs pursuant to Senate Rule 28.8

BACKGROUND:

Mutual Water Companies - Mutual water companies are private corporations, organized as either nonprofit mutual benefit corporations or general corporations, that provide water service only to their shareholders.^[1] In mutual water companies that supply domestic water, the share is associated with a specific property, and ownership of the property generally includes the right to receive water service from the company. Mutual water companies originated in California in the 1800s, when shareholders financed and built irrigation channels, pumps, and plumbing to deliver water to their own properties. More than 1,000 of these companies continue to operate in the state today, serving an estimated 1.3 million Californians in rural, suburban, and urban communities throughout the state.^[2]

Unlike investor-owned utilities, mutual water companies are governed by a board of directors elected by shareholders, who fund the operation, maintenance, and improvement of the water system through water charges and assessments.^[3] The companies vary considerably in size and capacity. Some serve small communities and are managed largely by shareholder-volunteers, while others operate with full-time staff and serve larger communities. Aging infrastructure and limited access to upfront capital for capital improvement projects are among the most common challenges reported by mutual water companies, particularly smaller systems with limited administrative capacity.

Although mutual water companies are generally exempt from regulation by the CPUC, they remain subject to a range of state and federal oversight requirements. Companies with 200 or more service connections are regulated by the State Water Resources Control Board's Division of Drinking Water, while smaller systems are typically overseen by county health departments. Mutual water companies are also subject to the federal Safe Drinking Water Act, which establishes drinking water quality and public health standards for public water systems.

COMMENTS:

1. Author’s Statement. According to the author, “California is served by public and private water service providers, including mutual water companies that operate as small, private nonprofit corporations delivering water to shareholders within a designated area. Unlike public water providers, mutual water companies are not automatically subject to standard transparency requirements. That is why legislation was necessary to extend Brown Act-style open meeting, public record, audit, and budget requirements to these entities (Chapter 633, Statutes of 2013). Public agencies are also subject to Proposition 218, which requires advanced customer notification and engagement when rate changes are proposed. However, these requirements do not apply to private providers. As a result, shareholders are not guaranteed advance notice or a clear forum to provide feedback to a mutual water company’s board on potential rate increases. In Altadena, approximately 25,000 residents receive water primarily from one of three companies: Lincoln Avenue Water Company, Rubio Cañon Land and Water Association, and Las Flores Water Company. As these companies have sought rate increases to recover financially from the Eaton Fire, they have done so without consistent timelines and outreach to shareholders. For instance, advanced notification and opportunities for public discussion of proposed charges have been unclear and insufficient. SB 1417 addresses this gap. It requires mutual water companies to provide standard shareholder notification and hold a public meeting before applying for a rate increase exceeding 20%. The bill ensures transparency by requiring a written explanation of the request and mandating that meetings be held in accessible locations. SB 1417 guarantees access to key information by requiring companies to provide, upon request, shareholder contact lists and any written rate increase proposal to qualified individuals.”
2. The Eaton Fire's Impact on Water Systems. The January 2025 Eaton Fire killed at least 19 people, forced more than 100,000 residents to evacuate, and destroyed more than 9,000 homes and structures. The fire also affected water systems serving the community, including three mutual water companies in Altadena: Los Flores Water Company, Lincoln Avenue Water Company, and Rubio Canyon Land and Water Association. Rubio Canyon Land and Water Association serves approximately 9,600 residents through more than 3,140 service connections,^[4] while Lincoln Avenue Water Company served more than 16,000 residents before the fire.^[5] These companies had varying levels of insurance coverage to support infrastructure repairs and restoration of service.

The fire affected not only water infrastructure, but also the customer base on which these companies rely to recover costs and fund ongoing operations. Lincoln Avenue Water Company reported losing approximately 58% of its customers and revenue after the fire, while reports indicate that Los Flores Water Company also experienced significant customer losses. These losses highlight some of the challenges mutual water companies may face following a major disaster, including repairing damaged infrastructure and recovering costs while portions of their customer base remain displaced.

1. Need for this Bill. Unlike public water agencies, mutual water companies are not subject to Proposition 218, which establishes notice and public participation requirements before certain rate increases are adopted. Current law requires mutual water companies that operate public water systems to comply with specified open meeting, recordkeeping, and budget requirements, but does not establish uniform requirements for notice and public meetings before significant assessments or water charge increases are considered. The author notes that the Eaton Fire and subsequent recovery efforts raised concerns regarding notice and public participation when mutual water companies consider assessments and water charge increases. Shareholders were not always provided with clear and consistent advance notice regarding when proposed charges would be discussed or adopted, and the timing and visibility of notifications varied among the three companies. The author cites the following examples:

• Los Flores Water Company: Applied a $3,000 fee for customers that will be assessed over the next five years. The charge appeared to be discussed at October 2025 and January 2026 board meetings addressing wildfire recovery, but shareholders were not provided advance notice that the fee would be considered. A written notice dated March 2026 indicated that the charge had been adopted by the board at its February 5^th meeting and would take effect on April 1^st, 2026.
• Rubio Cañon Land and Water Association: Proposed an 11% rate increase and a fire recovery fee of up to $30 per month.^[6] A March 18^th notice indicated that the charge would take effect on May 1st and referenced rate adjustments discussed at a February 3rd special meeting, but advance notice that a rate increase would be considered could not be identified.
• Lincoln Avenue Water Company: Adopted a $15 rate increase that took effect in March 2026 and considered imposing an additional fee.^[7] The advance notice specifically describing the proposed increase could not be identified. A letter was reportedly distributed after the decision was made, and the company's website did not provide additional information regarding a public forum or agenda related to the increase.

The author further notes that many residents affected by the fire were simultaneously facing the costs of rebuilding homes and returning to their community while also being asked to absorb costs associated with restoring local water systems. SB 1417 seeks to establish minimum notice and public meeting requirements before a mutual water company levies an assessment or implements a significant water charge increase. According to the author, these requirements are intended to provide shareholders and other interested persons with advance notice of proposed increases and an opportunity to review and comment on those proposals before they take effect.

1. Who Supported the Increase? This measure requires a mutual water company proposing to levy an assessment or increase water charges by more than 20% to prepare a written proposal. The proposal must specify the amount of the assessment or water charge increase, explain why the increase is being proposed and how the funds will be used, and identify the board members who voted for the proposal. The author seeks to increase transparency by ensuring that shareholders receive information regarding proposed assessments and rate increases before they are imposed. Such information can help shareholders better understand the basis for proposals that may affect their water costs. However, requiring the written proposal to identify individual board members who voted for the proposal may shift attention from the merits of the proposal to the board members who supported it. As such, the committee recommends deleting the requirement that the written proposal identify the board members voting in favor of the proposed assessment or water charge increase and instead requiring that the individual votes of board members be recorded in the minutes of the meeting at which the vote was taken.
2. Access to Public Meetings. SB 1417 requires a mutual water company to convene a public meeting regarding a proposed assessment or water charge increase in a city or county building that can accommodate at least 100 participants and is located within five miles of the company's service area or serves a county that includes the company's service area. Providing shareholders with adequate space to attend public meetings can help ensure that interested participants are able to observe and participate in discussions regarding proposed assessments and water charge increases that may affect their households. It can also reduce the likelihood that interested shareholders are unable to attend due to space limitations. However, California’s more than 1,000 mutual water companies are diverse in their size, structure, and operations. They serve urban, suburban, and rural communities throughout the state. Some are small systems managed by shareholders, while others operate more like municipal water systems with full-time staff. Therefore, the requirement that the meeting be held in a building with capacity for at least 100 participants may not be feasible for all mutual water companies, particularly those serving smaller or rural communities. Given these reasons, the committee recommends that, if a facility meeting these requirements is not available, the company shall convene the meeting in the largest publicly accessible facility available. Consistent with the bill, the facility shall otherwise be located in or within five miles of the company’s service area or serve a county that includes the company’s service area.
3. Notice to Newspapers and Radio Stations. This measure requires a mutual water company to provide or send a copy of the written proposal and notice of the public meeting at least 45 days before the meeting to all general circulation newspapers and radio stations serving the county in which the mutual water company operates. Providing notice to shareholders regarding proposed assessments and water charge increases can help ensure that affected customers receive information regarding decisions that may affect their water costs. However, requiring notice to all general circulation newspapers and radio stations serving the county may create additional administrative responsibilities and costs for mutual water companies, particularly with limited administrative and financial capacity. Therefore, the committee recommends providing additional flexibility in how notice is provided. Such notice may be disseminated through a general circulation newspaper, radio station, county-maintained public notice portal, or digital bulletin board serving the county in which the mutual water company operates, as well as through company websites or social media, as applicable.
4. Scope of Shareholder Information Rights. Notices regarding proposed assessments and water charge increases can serve as an important opportunity to inform shareholders of their rights. SB 1417 requires notices regarding proposed assessments and water charge increases to include specified language informing shareholders of certain rights, including the right to vote for the company's board of directors, participate in board meetings, and receive all information regarding the operation of the company and its water system. However, the statement that shareholders have a right to “receive all information regarding the operation of the company and its water system” may create confusion regarding the scope of shareholder inspection rights under existing law. Current law provides shareholders with the right to inspect company books and records, while the bill's reference to “all information” goes beyond the specific rights provided under existing law. To clarify the scope of shareholder rights, the committee recommends deleting the reference to receiving “all information regarding the operation of the company and its water system” and instead referencing a shareholder's right to inspect the company's books and records pursuant to existing law.
5. Shareholder Lists and Contact Information. Current law requires a mutual water company that operates a public water system to make specified records available upon written request to eligible persons, including board meeting agendas and minutes, annual budgets, accounting reports, water quality test records, and annual reports. This bill would expand those disclosure requirements by adding the current shareholder list, including all contact information available to the mutual water company, to the records that must be provided upon request. Unlike the other records that provide information regarding the management and operation of the mutual water company, the shareholder list identifies private individuals who own shares in the corporation and may include personal contact information. Requiring disclosure of that information to any eligible person, including tenants and local officials, raises privacy concerns. As such, the committee recommends deleting the requirement to disclose the shareholder list and associated contact information upon request.
6. Shareholder Contact Information in Required Notices. SB 1417 further requires the Mutual Water Company, when sending notice of a proposed assessment or water charge increase to non-shareholder eligible persons, to inform those recipients that they may obtain the current shareholder list and associated contact information. Non-shareholder eligible persons include tenants, local elected officials, and chief administrative officers of nearby cities and counties. The notice would inform persons who are not shareholders that they may obtain a list identifying individual shareholders and their contact information. Given the similar privacy concerns discussed above, the committee recommends deleting the corresponding notice language regarding the availability of the shareholder list and associated contact information.
7. Related Legislation.

SB 1291 (Gonzalez, 2026) Requires specified actions of mutual water companies and their boards, including providing teleconferencing for certain companies and adopting an annual budget. Status: Held In Senate Committee on Appropriations.

1. Prior Legislation.

AB 240 (Rendon) Requires mutual water companies to comply with open meeting, public record, audit, and budget requirements and allows them to impose liens to collect unpaid charges. Status: Chapter 633, Statutes of 2013.

1. Double Referral. This bill is double referred. Upon passage in this committee, it will be referred to the Assembly Committee on Privacy and Consumer Protection.

REGISTERED SUPPORT / OPPOSITION:

Support

Los Angeles County
Physicians for Social Responsibility - Los Angeles

Oppose Unless Amended

California Association of Mutual Water Companies
Community Water Systems Alliance

Opposition

None on file.

Analysis Prepared by: Lina V. Malova / U. & E. / (916) 319-2083

1. Corporations Code §14300. ↑

2. California Association of Mutual Water Companies, FAQs About Mutual Water Companies (stating that more than 1,000 mutual water companies operate in California and serve approximately 1.3 million residents, and that such companies are located in urban, suburban, and rural communities and vary in size and staffing). ↑

3. California Association of Mutual Water Companies, FAQs About Mutual Water Companies (shareholders elect a board of directors; shareholders fund and oversee the system). ↑

4. Rubio Canon Land and Water Association; “History”; https://www.rclwa.org/our-company/history/ ↑

5. LAist; “Big decisions are in store for small Altadena water companies and their customers after Eaton Fire”; https://laist.com/news/climate-environment/small-altadena-water-companies-eaton-fire ↑

6. PasadenaStarNews: “Altadena utility customers to see water rate increases in 2026, amid fire recovery”; https://www.pasadenastarnews.com/2026/02/13/in-the-pipeline-altadena-utility-customers-to-see-water-rate-increases-in-2026-amid-fire-recovery/ ↑

7. PasadenaNow; “Another Altadena Water Company Calls Shareholder Meeting to Address Eaton Fire Financial Woes”; https://pasadenanow.com/main/another-altadena-water-company-calls-shareholder-meeting-to-address-eaton-fire-financial-woes ↑

 THIRD READING  

Bill No: SB 1417

Author: Pérez (D), et al.

Amended: 4/23/26

Vote: 21

SENATE ENERGY, U. & C. COMMITTEE: 13-2, 4/13/26

AYES: Allen, Archuleta, Arreguín, Becker, Caballero, Gonzalez, Hurtado, McNerney, Reyes, Richardson, Rubio, Stern, Wahab

NOES: Ochoa Bogh, Strickland

NO VOTE RECORDED: Dahle, Grove

SUBJECT: Mutual water companies: assessments and water charges: notice

SOURCE: Author

DIGEST:

This bill includes various provisions to provide greater transparency regarding rate and assessment increases by mutual water companies.

ANALYSIS:

Existing law:

1. Establishes and vests the California Public Utilities Commission (CPUC) with regulatory over public utilities, including electrical corporations. (Article XII of the California Constitution)
2. Provides that any person, firm, or corporation, their lessees, trustees, receivers or trustees appointed by any court whatsoever, owning, controlling, operating, or managing any water system within this State, who sells, leases, rents, or delivers water to any person, firm, corporation, municipality, or any other political subdivision of the State, whether under contract or otherwise, is a public utility, and is subject to the jurisdiction, control, and regulation of the CPUC, except as otherwise provided. (Public Utilities Code §2701)
3. Provides that any corporation or association which is organized for the purpose of delivering water solely to its stockholders or members at cost, and which delivers water to others than its stockholders or members, or to the state or any department or agency thereof or any school district, or to any other mutual water company, for compensation, is a public utility and is subject to the jurisdiction, control, and regulation of the CPUC. (Public Utilities Code §2702)
4. Provides that any corporation or association that is organized for the purposes of delivering water to its stockholders and members at cost, including use of works for conserving, treating, and reclaiming water, and that delivers water to no one except its stockholders or members, or to the state or any agency or department thereof, to any city, county, school district, or other public district, or any federal agency that provides fire protection or operates park facilities, or to any other mutual water company, at cost, is not a public utility, and is not subject to the jurisdiction, control or regulation of the CPUC. Authorizes a mutual water company to perform specified acts without becoming a public utility and becoming subject to the jurisdiction, control or regulation of the CPUC, including delivering water at cost to any lessee of its stock or shares or other evidence of membership where the lease is in writing signed by the owner of the stock or shares or other evidence of membership and the lessee thereof and approved by the mutual water company. Requires all leases and contracts to be preserved for a period of 10 years by a mutual water company and subject to inspection by the CPUC. Defines the term “cost” as used in this to mean without profit. (Public Utilities Code §2705)
5. Authorizes a mutual water company organized for or engaged in the business of selling, distributing, supplying, or delivering water for irrigation purposes, and requires a mutual water company organized for or engaged in the business of selling, distributing, supplying, or delivering water for domestic use, to provide in its articles or bylaws that water shall be sold, distributed, supplied, or delivered only to owners of its shares and that those shares are appurtenant to certain lands, as specified. (Corporations Code §14300)
6. Authorizes a mutual water company that is not a public utility to levy assessments upon its shares, whether or not they are fully paid, unless otherwise provided in its articles or bylaws. Provides that the right to receive water or dividends may be denied and may be sold and transferred without those lands as if not appurtenant, if any shares of the corporation that have been made appurtenant to any land become delinquent in the payment of assessments. Requires the purchaser to acquire the right to receive water as provided in the articles or bylaws of the corporation, or they may be forfeited to the corporation. (Corporations Code §14303)
7. Requires, pursuant to the Mutual Water Company Open Meeting Act, a board of directors of a mutual water company that operates a public water system to allow an eligible person, as defined, to personally attend a meeting of the board, if the eligible person gave the board at least 24 hours’ advance written notice of their intent to personally attend the meeting. Authorizes the board to allow an eligible person who was denied attendance at a meeting for failure to provide this notice, or because the number of eligible persons having already provided notice of attendance exceeds the room capacity of the place of the meeting, to attend the meeting by teleconference. Requires the board to provide an eligible person attending a meeting by teleconference a copy of the documents to be discussed at the meeting, except as specified. (Corporations Code §14305)
8. Defines “eligible persons” for purposes of the Mutual Water Company Open Meeting Act to include, among others, shareholders of the mutual water company, a person who is an occupant, pursuant to a lease or rental agreement, of commercial space or a dwelling unit to which the mutual water company sells, distributes, supplies, or delivers drinking water, and an elected official of a city or county who represents people who receive drinking water directly from the mutual water company, as specified. (Corporations Code §14305(o))
9. Requires a mutual water company that operates a public water system to make certain records promptly available upon written request to an eligible person, as defined, upon payment of fees covering direct costs of duplication, including, among other documents, agendas and minutes of board meetings and copies of the mutual water company’s annual budget and accounting report. (Corporations Code §14307)

This bill:

1. Prohibits a mutual water company from charging, issuing a bill, or otherwise seeking to hold tenants of shareholders responsible for the costs of water or its delivery, except for tenants, as provided in Section 2705 of the Public Utilities Code, where the tenant is a lessee of the corporation’s shares or stock, or the tenant is a lessee of land of a shareholder, and the corporation has approved the lease.
2. Requires all notices of charges for water to be sent to the last known address of the shareholder or tenant, as applicable.
3. Requires a mutual water company that operates a public water system and that proposes to levy an assessment or to increase the charge for water to shareholders by more than 20% to comply with specified notice and public meeting requirements at least 30 days before it seeks to collect the assessment or increase the water charge. Requires the mutual water company to prepare a written proposal to collect an assessment or to increase a water charge, as specified, and to convene a public meeting regarding the proposal, as provided. Requires the mutual water company to send a copy of the written proposal and the notice of the public meeting to specified persons, along with other information, and to also send a copy of the written proposal and the notice of the public meeting to certain newspapers and radio stations.
4. Requires a mutual water company to make available to eligible persons, upon request, a copy of the current list of shareholders, including all contact information, and a copy of a written proposal to levy an assessment or to increase a water charge. Includes as an eligible person, for purposes of all of the above-described provisions, the chief administrative officer for each city, county, and government water agency in the mutual water company’s service area, as specified. Prohibits a mutual water company that provides the requested records in digital form from charging for any duplication costs, as provided.

Background

Mutual water companies. Mutual water companies are private not-for-profit organizations of shareholder-owned water systems organized under Corporations Code Section 14300 et seq. and serving 1.3 million Californians in rural and pockets of urban areas. Some of these water companies date back to the 1800’s when they constructed irrigation channels and installed pumps to distribute water to shareholder-owned properties, at the time in largely rural areas, while others date back to the mid-1900’s as housing was being built in formerly rural areas. Over time, mutual water companies gave way to municipally owned water departments and investor-owned water utilities, that are regulated by the CPUC. However, mutual water companies are governed by their shareholders, via a board (often of volunteers). Shareholders are property owners who receive service and hold shares and liability for the integrity of the water system, including assessments to cover the costs to maintain the systems.

Eaton Fire impacts on mutual water companies. The Southern California January 2025 Eaton Fire killed 31 people and forced more than 200,000 to evacuate the area, destroyed 18,000 homes and structures, and burned nearly 60,000 acres of land. The fire also impacted water systems serving the community, including three mutual water companies in Altadena: Las Flores Water Company, Lincoln Avenue Water Company, Rubio Canyon Land and Water Association, who serve most residents and businesses in Altadena. These water companies had varying degrees of insurance to help them rebuild the infrastructure to restore service. Though the continued ability of the water system to provide service may also rest on the pace of the return of the customer base to the impacted area, as the ability to recover costs rests on continuing to provide service to customers.

Comments

Mutual water companies seek rate increases to recover from the Eaton Fire. In order to restore service, each of the mutual water companies have sought rate increases to financially recover from the Eaton Fire. The author’s office contends they have done so without consistent timelines of outreach to shareholders. For instance, the advanced notification, which would include a public forum to discuss proposed charges, is not always clear. The author’s office provided the following information concerning rate and assessment increases:

Las Flores Water Company:

• Applied a $3,000 fee for standing homes, and to destroyed homes once rebuilt.^[1]
• The charge appeared to be presented in the October 2025 and January 2026 board meetings, which discussed plans for wildfire recovery, but no advanced notice of a prospective rate increase to advertise these meetings was provided in advance to shareholders.^[2] Ultimately, nearly 200 shareholders demanded answers and expressed frustration and concern over these proposed charges.^[3]
• A written notification dated March 2026 indicated that the charge was adopted by the board on their February 5^th meeting to be applied on April 1, 2026.^[4]

Rubio Cañon Land and Water Association:

• Proposed an 11% rate increase, and fire recovery fee of up to $30 a month.^[5]
• A March 18^th notice indicated that charge will be applied May 1^st with reference to rate adjustments being discussed at a February 3^rd special meeting, but no advanced notification for shareholders to know that a rate increase would be discussed appeared to be found.^[6]

Lincoln Avenue Water Company:

• Adopted a $15 rate increase that took effect in March 2026 and considered imposing an additional fee.^[7]
• No advanced notification to specifically highlight or discuss the rate increase appeared to be found but a letter was reportedly sent after the decision was made, and the company’s website did not provide further details about any forum or agenda.^[8]

Bill seeks greater notification and transparency concerning proposed increases to rates and assessments. This bill proposes greater notification of proposed rate and assessment increases by mutual water companies. The author’s office has shared that survivors from the Eaton Fire are dealing with increased costs to rebuild their homes, and communities, including costs from the rebuilding of the mutual water company systems. They share the need for more transparency as residents have been surprised by the increased costs being placed on them by the mutual water companies. The author’s office notes there is a lack of more visible and advanced notifications about proposed rate changes.

Opponents raise concerns about bill’s prescriptive requirements. In opposition to this bill, the California Association of Mutual Water Companies (Cal Mutuals) states they support aspects of this bill to provide greater explanation of significant rate increases; however, they have concerns with the prescriptive nature of some of the requirements in the bill. Specifically, they raise concerns about the disclosure of shareholder names and contact information, the identification of board members who voted for a rate increase, and prescriptive notice and meeting mandates (such as requiring notices are publicized in newspapers and other media) or requiring the use of facilities with specific room capacity (at least 100 people). Cal Mutuals notes that the identification of board votes may discourage volunteer board service. They argue that board votes are already reflected in meeting minutes under existing governance practices, and requiring individual vote attribution in a formal statutory notice raises significant policy concern. Cal Mutuals also contends that the most important notices are those sent directly to their customers, as opposed to publicizing them in other media. Moreover, Cal Mutuals believes the required disclosure of shareholder information raises significant privacy concerns which could create tension with established privacy protections and exposing shareholders to unwanted solicitation, harassment, or misuse of personal information without proper safeguards.

Tenant/occupant billing. Under current law in both the Public Utilities Code and Corporations Code, mutual water companies are limited in who they can bill for services, largely restricted to their shareholders, or else they may risk becoming a public utility subject to the regulatory authority of the CPUC. However, there are exceptions where a mutual water company is authorized to provide water at cost without becoming a public utility, such as in the instance of addressing a fire or other emergencies. An additional exception provides that where a shareholder enters into a lease agreement with an occupant and the lease agreement is provided to the mutual water company, the mutual water company can bill the occupant. The law requires the mutual water company to maintain the lease agreements for 10 years and makes them subject to the inspection of the CPUC. The bill prohibits billing tenants for water service. However, amendments taken in the policy committee attempt to address the authorized exception in the law, by authorizing billing of tenants where they are authorized by Public Utilities Code Section 2705. Given the need to help the community rebuild, the continued ability of utility providers to collect charges for water service, including from tenants who agreed to these arrangements, can support efforts to restore service more quickly, while protecting customers who have not agreed to these arrangements from being unfairly billed.

Related/Prior Legislation

SB 1291 (Gonzalez) of 2026, requires specified actions of mutual water companies and their boards, including providing teleconferencing for certain companies, and adopt an annual budget, among other requirements. The bill is pending in the Senate Banking and Financial Institutions Committee.

AB 240 (Rendon, Chapter 633, Statutes of 2013) required mutual water companies to comply with open meeting, public record, audit, and budget requirements and allows them to impose liens to collect unpaid charges.

FISCAL EFFECT: Appropriation: No Fiscal Com.: No Local: No

SUPPORT: (Verified 4/24/26)

County of Los Angeles

OPPOSITION: (Verified 4/24/26)

California Association of Mutual Water Companies

ARGUMENTS IN SUPPORT: According to the author’s office:

In a joint meeting facilitated by the Altadena Coalition of Neighborhood Associations, the companies fielded questions about these water rate increases among other charges facing fire survivors. Some residents have still received water service charges from the time of the Eaton Fire although their property was destroyed. This dynamic underscores the need for state law to ensure consistent requirements for how mutual water companies provide advanced notification and a meeting for shareholders specifically if they are proposing a rate increase to ensure appropriate shareholder notice and feedback prior to adoption.

ARGUMENTS IN OPPOSITION: According to Cal Mutuals, “…SB 1417 as drafted includes requirements that do not appear reasonably related to achieving the bill’s intended purpose. The bill raises several significant policy and legal concerns.” They express concerns with the prohibition on tenant billing, requiring board vote identification, prescriptive requirements in the bill, and disclosure of shareholder information.

Prepared by: Nidia Bautista / E., U. & C. / (916) 651-4107

4/24/26 10:52:37

**** END ****

1. https://laist.com/brief/news/climate-environment/las-flores-water-company-altadena-whats-happening-and-why ↑

2. https://lasfloreswaterco.com/documents/lfwc-Fire-Assessment-Letter-2026.pdf ↑

3. https://www.sgvtribune.com/2026/02/13/in-the-pipeline-altadena-utility-customers-to-see-water-rate-increases-in-2026-amid-fire-recovery/ ↑

4. https://lasfloreswaterco.com/documents/lfwc-Fire-Assessment-Letter-2026.pdf ↑

5. https://www.pasadenastarnews.com/2026/02/13/in-the-pipeline-altadena-utility-customers-to-see-water-rate-increases-in-2026-amid-fire-recovery/ ↑

6. https://www.rclwa.org/uploads/files/LatestNews/2026%20Rate%20Increase.pdf ↑

7. https://pasadenanow.com/main/another-altadena-water-company-calls-shareholder-meeting-to-address-eaton-fire-financial-woes ↑

8. https://www.sgvtribune.com/2026/02/13/in-the-pipeline-altadena-utility-customers-to-see-water-rate-increases-in-2026-amid-fire-recovery/ ↑

SENATE COMMITTEE ON ENERGY, UTILITIES AND COMMUNICATIONS

Senator Benjamin Allen, Chair

2025 - 2026 Regular

Bill No: Hearing Date: 4/13/2026

SUBJECT:

DIGEST: This bill includes various provisions to provide greater transparency regarding rate increases by mutual water companies.

ANALYSIS:

Existing law:

1. Authorizes any corporation organized for or engaged in the business of selling, distributing, supplying, or delivering water for irrigation purposes, and requires any corporation organized for or engaged in the business of selling, distributing, supplying, or delivering water for domestic use, to provide in its articles or bylaws that water shall be sold, distributed, supplied, or delivered only to owners of its shares and that those shares are appurtenant to certain lands, as specified. Under existing law, these corporations are known as mutual water companies. (Corporations Code §14300)
2. Authorizes a mutual water company that is not a public utility to levy assessments upon its shares, except as provided. (Corporations Code §14303)
3. The Mutual Water Company Open Meeting Act requires a board of directors of a mutual water company that operates a public water system to allow an eligible person, as defined, to personally attend a meeting of the board, if the eligible person gave the board at least 24 hours’ advance written notice of their intent to personally attend the meeting. Authorizes the board to allow an eligible person who was denied attendance at a meeting for failure to provide this notice, or because the number of eligible persons having already provided notice of attendance exceeds the room capacity of the place of the meeting, to attend the meeting by teleconference. Existing law requires the board to provide an eligible person attending a meeting by teleconference a copy of the documents to be discussed at the meeting, except as specified. (Corporations Code §14305)
4. Requires a mutual water company that operates a public water system to make certain records promptly available upon written request to an eligible person, as defined, upon payment of fees covering direct costs of duplication, including, among other documents, agendas and minutes of board meetings and copies of the mutual water company’s annual budget and accounting report. (Corporations Code §14307)
5. Defines “eligible persons” for purposes of this requirement to include, among others, shareholders of the mutual water company, a person who is an occupant, pursuant to a lease or rental agreement, of commercial space or a dwelling unit to which the mutual water company sells, distributes, supplies, or delivers drinking water, and an elected official of a city or county who represents people who receive drinking water directly from the mutual water company, as specified. (Corporations Code §14305(o))

This bill:

1. Prohibits a mutual water company from charging, issuing a bill, or otherwise seeking to hold tenants of shareholders responsible for the costs of water or its delivery and would require all notices of charges for water to be sent to the shareholders at their last known address.
2. Requires a mutual water company that operates a public water system and that proposes to levy an assessment or to increase the charge for water to shareholders by more than 20% to comply with specified notice and public meeting requirements at least 30 days before it seeks to collect the assessment or increase the water charge. Requires the mutual water company to prepare a written proposal to collect an assessment or to increase a water charge, as specified, and to convene a public meeting regarding the proposal, as provided. Requires the mutual water company to send a copy of the written proposal and the notice of the public meeting to specified persons, along with other information, and to also send a copy of the written proposal and the notice of the public meeting to certain newspapers and radio stations.
3. Requires a mutual water company to make available to eligible persons, upon request, a copy of the current list of shareholders, including all contact information, and a copy of a written proposal to levy an assessment or to increase a water charge. Includes as an eligible person, for purposes of all of the above-described provisions, the chief administrative officer for each city, county, and government water agency in the mutual water company’s service area, as specified. Prohibits a mutual water company that provides the requested records in digital form from charging for any duplication costs, as provided.

Background

Mutual water companies. Mutual water companies are private not-for-profit organizations of shareholder-owned water systems organized under Corporations Code §14300 et seq. and serving 1.3 million Californians in rural and pockets of urban areas. These water companies date back to the 1800’s when they constructed irrigation channels and installed pumps to distribute water to shareholder-owned properties, at the time in largely rural areas. Over time, mutual water companies gave way to municipally owned water departments and investor-owned water utilities, that are regulated by the California Public Utilities Commission. However, mutual water companies are governed by their shareholders, via a board (often of volunteers). Shareholders are property owners who receive service and hold shares and liability for the integrity of the water system, including assessments to cover the costs to maintain the systems.

Comments

Eaton Fire impacts on mutual water companies. The Southern California January 2025 Eaton Fire killed 31 people and forced more than 200,000 to evacuate the area, destroyed 18,000 homes and structures, and burned nearly 60,000 acres of land. The fire also impacted water systems serving the community, including three mutual water companies in Altadena: Los Flores Water Company, Lincoln Avenue Water Company, Rubio Canyon Land and Water Association, who serve most residents and businesses in Altadena. These water companies had varying degrees of insurance to help them rebuild the infrastructure to restore service. Though the continued ability of the water system to provide service may also rest on the pace of the return of the customer base to the impacted area, as the ability to recover costs rests on providing service to customers.

Mutual water companies seek rate increases to recover from the Eaton Fire. In order to restore service, each of the mutual water companies have sought rate increases to financially recover from the Eaton Fire. The author’s office contends they have done so without consistent timelines of outreach to shareholders. For instance, the advanced notification, which would include a public forum to discuss proposed charges, is not always clear. The author’s office provided the following information concerning rate and assessment increases:

Las Flores Water Company:

• Applied a $3,000 fee for standing homes, and to destroyed homes once rebuilt.^[1]
• The charge appeared to be presented in the October 2025 and January 2026 board meetings, which discussed plans for wildfire recovery, but no advanced notice of a prospective rate increase to advertise these meetings was provided in advance to shareholders.^[2] Ultimately, nearly 200 shareholders demanded answers and expressed frustration and concern over these proposed charges.^[3]
• A written notification dated March 2026 indicated that the charge was adopted by the board on their February 5^th meeting to be applied on April 1, 2026.^[4]

Rubio Cañon Land and Water Association:

• Proposed an 11% rate increase, and fire recovery fee of up to $30 a month.^[5]
• A March 18^th notice indicated that charge will be applied May 1^st with reference to rate adjustments being discussed at a February 3^rd special meeting, but no advanced notification for shareholders to know that a rate increase would be discussed appeared to be found.^[6]

Lincoln Avenue Water Company:

• Adopted a $15 rate increase that took effect in March 2026 and considered imposing an additional fee.^[7]
• No advanced notification to specifically highlight or discuss the rate increase appeared to be found but a letter was reportedly sent after the decision was made, and the company’s website did not provide further details about any forum or agenda.^[8]

Bill seeks greater notification and transparency concerning increasing assessments. This bill attempts to require greater notification of proposed rate and assessment increases. The author’s office has shared that survivors from the fires are dealing with increased costs to rebuild their homes, and communities, including costs from the rebuilding of these systems. They share the need for more transparency as residents were surprised by the increased costs being placed on them. The author’s office notes the lack of more visible and advanced notifications about rate changes being proposed. In opposition to this bill, the California Association of Mutual Water Companies (CalMutuals) states they support aspects of this bill to provide greater explanation of significant rate increases. However, they have concerns with the prescriptive nature of some of the requirements, including the disclosure of shareholder names and contact information, the identification of board members who voted for a rate increase, and prescriptive notice and meeting mandates (such as publicizing in newspapers and other media or using facilities with specific room capacity (at least 100 people). Additionally, the association also raises concerns with this bill’s language that prohibits the companies from charging tenants for water service. They note that in some cases, tenants and property owners have mutually agreed on billing arrangements. Given the need to help the community rebuild, it seems an amendment to allow for water service collection from tenants who agreed to arrangements could help restore service more quickly, while protecting customers who are not the customer of record. The author and committee may wish to amend this bill to incorporate the exemption from the prohibition where a tenant and shareholder have mutually agreed to billing arrangements to assume responsibility as direct customers, where authorized by law.

Prior/Related Legislation

SB 1291 (Gonzalez) of 2026, requires specified actions of mutual water companies and their boards, including providing teleconferencing for certain companies, and adopt an annual budget, among other requirements. The bill is pending in the Senate Banking and Financial Institutions Committee.

AB 240 (Rendon, Chapter 633, Statutes of 2013) required mutual water companies to comply with open meeting, public record, audit, and budget requirements and allows them to impose liens to collect unpaid charges.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

SUPPORT:

None received

OPPOSITION:

California Association of Mutual Water Companies

ARGUMENTS IN SUPPORT: According to the author’s office:

In a joint meeting facilitated by the Altadena Coalition of Neighborhood Associations, the companies fielded questions about these water rate increases among other charges facing fire survivors. Some residents have still received water service charges from the time of the Eaton Fire although their property was destroyed. This dynamic underscores the need for state law to ensure consistent requirements for how mutual water companies provide advanced notification and a meeting for shareholders specifically if they are proposing a rate increase to ensure appropriate shareholder notice and feedback prior to adoption.

ARGUMENTS IN OPPOSITION: According to Cal Mutuals, “…SB 1417 as drafted includes requirements that do not appear reasonably related to achieving the bill’s intended purpose. The bill raises several significant policy and legal concerns.” They express concerns with the prohibition on tenant billing, requiring board vote identification, prescriptive requirements in the bill, and disclosure of shareholder information.

-- END --

1. https://laist.com/brief/news/climate-environment/las-flores-water-company-altadena-whats-happening-and-why ↑

2. https://lasfloreswaterco.com/documents/lfwc-Fire-Assessment-Letter-2026.pf ↑

3. https://www.sgvtribune.com/2026/02/13/in-the-pipeline-altadena-utility-customers-to-see-water-rate-increases-in-2026-amid-fire-recovery/ ↑

4. https://lasfloreswaterco.com/documents/lfwc-Fire-Assessment-Letter-2026.pdf ↑

5. https://www.pasadenastarnews.com/2026/02/13/in-the-pipeline-altadena-utility-customers-to-see-water-rate-increases-in-2026-amid-fire-recovery/ ↑

6. https://www.rclwa.org/uploads/files/LatestNews/2026%20Rate%20Increase.pdf ↑

7. https://pasadenanow.com/main/another-altadena-water-company-calls-shareholder-meeting-to-address-eaton-fire-financial-woes ↑

8. https://www.sgvtribune.com/2026/02/13/in-the-pipeline-altadena-utility-customers-to-see-water-rate-increases-in-2026-amid-fire-recovery/ ↑