SACRAMENTO (CBS13) — California’s water districts have are facing a billion-dollar loss as residents and businesses conserve water during the drought.

With many cutting their water use by more than 25 percent, they’re paying less on their water bill, which means less for water districts who rely on that money to keep their systems operating.

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The State Water Resources Control Board opened discussion on Wednesday to figure out how it can help keep water use low, but also keep districts above water.

“What are state-of-the-art methods for doing that kind of pricing, so that you can be encouraging conservation while also making sure you have enough money to run your water system, and avoid the perverse incentive to sell more water?” said board chair Felicia Marcus.

In some cases, water districts have been slow to encourage conservation, she says, because they’re worried their money will also dry up. She says that’s not acceptable.

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“In some cases you may pay less if you use more which sends the wrong signal for conservation,” she said.

Among the ideas to help is encouraging tiered pricing for districts, leaving users paying higher rates as they use more water, or simply raising rates or creating a drought emergency fee for all customers.

Tiered pricing has been called into question recently after an appellate court in Orange County ruled San Juan Capistrano’s tiered water rates are unconstitutional. The ruling was limited to just the district, but California’s Proposition 218 prevents government agencies from charging more than the cost of a service. However, with districts running in the red, the issue could potentially be sidestepped.

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The board says the ideas are simply ideas for now, and that any mandated pricing plans might have to be taken to the legislature.