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Arroyo Grande water rates expected to increase because of lawsuit

May 11, 2026

By KAREN VELIE

Most of south San Luis Obispo County is facing increased water rates because of an ongoing lawsuit over Lopez Lake water, with Arroyo Grande residents in line to pay the bulk of the costs in the fight over water for residents or for an endangered fish.

In Dec. 2024, a U.S. district judge sided with four environmental groups with a goal of protecting steelhead trout, a threatened species. She ordered San Luis Obispo County to increase the amount of water it releases from the Lopez Lake Dam each year.

Lopez Lake not only provides water for Arroyo Grande, Grover Beach, Pismo Beach, Oceano and Avila Beach, it is also used to fight wild fires.

The county appealed the ruling, arguing possible impacts on the California red-legged frog and tidewater goby—both endangered species. In late 2025, the 9th Circuit Court of Appeals vacated the 2024 ruling.

Meanwhile, the case is still proceeding through the court system. While the SLO County Board of Supervisors voted unanimously to file the appeal, it is the rate payers in Arroyo Grande, Pismo Beach, Grover Beach, Avila Beach and Oceano who will eventually pay for the cost of the suit through their water bills.

At this point, cost of fighting the lawsuit is more than $4.5 million with the rate payers in Arroyo Grande on the hook for 50.5% of the lawsuit, or currently more than $2.2 million. Grover Beach and Pismo Beach rate payers are responsible for more than $300,000 each with the remaining costs divided among the other two communities.

While the five communities receiving Lopez Lake water will fund the lawsuit, the residents of Nipomo could have a rate reduction in their future. Along with five operational wells, Nipomo purchases water from the City of Santa Maria, a set obligation that includes more water than the residents currently utilize.

With the anticipated addition of new homes and businesses in the Dana Reserve project, the cost to Nipomo rate payers will likely go down.

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Now it’s revealed Supervisor Paulding’s supporters and wife are associated or directly aiding this lawsuit?? Am I crazy or how is this even remotely allowed?


3

Here is a real possible solution to the whole mess that would create long term water security for the 5 Cities:


May 11, 2026


Dear AG and GB City Council and Oceano Services District electeds,


In 2017 when the Coastal Commission (CCC) granted the South County Sanitation District (SSLOCSD) a development permit for the redundancy project they required a number of Special Conditions focused on planning for potential relocation of the SSLOCSD to a new operational site safe from flooding and sea level rise by 2047. The first required ten year planning progress report by the SSLOCSD to the CCC is due one year from today.


At last month’s Ramona Park presentation by the County Water Agency on future possible desalination two important facts were shared. First, State water policy requires that wastewater be recycled before desalination would be approved. Second, County representatives clearly stated that the possible relocation of the SSLOCSD was the sole responsibility of AG, GB, and Oceano, the three member agencies of the SSLOCSD


The re-location of the SSLOCSD will be the largest public works project in the history of SLO County with an estimated cost of at least $300,000,000. At current discharge rates of an average 2.9 million gallons per day, full tertiary treatment would provide an approximate annual yield of 2,200 acre feet of “new” water for municipal distribution, agricultural use, or recharge to the groundwater basin. 


I strongly support this project as the right thing at the right time. It will provide cost effective and sustainable longterm water resiliency for the 5 Cities and the groundwater basin. Most citizens of AG, GB, and Oceano are ignorant of this project and it is imperative that public engagement and education be robust and transparent, especially if their enthusiastic support is valued.


The decision to move forward with the relocation, or not, is time sensitive. A project of this magnitude and complexity would, at best, take 15 years from start to finish. Very important, the State currently has billions of unallocated grant dollars for coastal resiliency projects. We should be first in line to apply for that funding. We need the CCC to make its decision in a timely manner so that the issues of future water availability, sustainability, and wastewater recycling can be addressed and solved.


Sincerely,


Charles Varni

Oceano


-8

If SLO County Board of Supervisors voted unanimously to file the appeal then the county should pay for it, it was their choice. Is county counsel handling it or did they use an outside firm? What are the details to where the 4.5 million+went?


16

Is the water source at least secure? Or are these environmentalists threatening our water security as well?


15

It is not, just a handful of years ago and Lopez Lake was basically dry and out elected officials, mayor and city council have done little to secure our water, including Paulding bith as council member and now as supervisor, but they continue approving more development which drains more water, while claiming the state will sue us if we don’t approve it. Well look someone else sued us while our officials did nothing but let it happen.


9