Proposed Water Rate Adjustments and Community Review Process

Published on April 01, 2026

The City of Tracy is undertaking a necessary update of its water rates to ensure the community continues to receive safe, reliable drinking water both now and in the future.

Updating Tracy’s water rates is essential to maintaining a safe, reliable water system for our community. Rising operational costs, aging infrastructure, and new state and federal requirements have outpaced the City’s current revenue, requiring the use of reserves in recent years — a model that isn’t sustainable long term. The proposed rate adjustments will help ensure the City can continue delivering high quality drinking water, make critical system improvements, and protect Tracy’s water future. No rates will change until after the Proposition 218 public review process, which gives every resident the opportunity to learn more and provide input.

In recent years, many components of Tracy’s water system have reached or surpassed their expected service life, increasing the need for upgrades and preventive maintenance. Key cost drivers include escalating energy and chemical prices, regulatory compliance requirements, and investments necessary to improve resiliency, reduce water loss, and ensure adequate capacity for current and future customers.

To help the public fully understand how rates are structured, the City has published detailed information—including background on the rate study process, system needs, financial planning scenarios, and frequently asked questions—on its water rate webpage at cityoftracy.org/waterrates. This resource outlines how the proposed rates are calculated, how funds may be used, and how the City ensures compliance with state law, cost‑of‑service standards, and long‑term financial planning best practices.

If the proposed rates pass through the Proposition 218 process, the average residential customer using 16 ccf (units) per month could see a $24–$25 increase in their monthly utility bill. This change would shift the City of Tracy from having the lowest water rates in the region to a position closer to the regional mid‑range, reflecting the true cost of operating and maintaining a modern water system.

The City also continues to offer reduced rates for qualifying low‑income customers. Applications are available at cityoftracy.org/paymentoptions.

As part of the Proposition 218 process, all property owners and water customers should have received a mailed notice containing details about the proposed rates, instructions on how to submit a written protest, and information about the upcoming public hearing. The City encourages the community to carefully review the materials, ask questions, and participate in this important decision‑making process.

For more information about the proposed water rates, the rate study, or the public review process, please visit cityoftracy.org/waterrates.