A lifeline rate prices an initial quantity of water, enough for drinking, cooking and sanitation, below the rate charged for consumption beyond it. A related structure discounts the bill for households that qualify on income or on participation in another assistance programme.
Why the two are not the same problem
A low first block is a rate structure. It applies to every account, and it can sometimes be supported on cost grounds: the first block is served by base supply rather than by peaking capacity, so a lower price for it is arguably cost-caused.
An income-qualified discount is not a rate structure but a subsidy, and it is the one that runs into the cost-of-service principle directly. Where the governing rule is that a charge may not exceed the cost of serving the property, income is not a property characteristic and cannot easily be the basis for a differential. States differ, some by statute, and the law is unsettled enough that the answer for a particular utility is a question for its own counsel.
Structures that get close
A low first block available to everyone. A fixed charge scaled by meter size, which correlates loosely with property size. A discount funded from a source outside the rate, such as voluntary customer contributions or a general fund appropriation, which is not a rate at all and therefore not measured against the rate rule. Direct bill assistance administered as a payment rather than as a price.
Each of these is exposed differently. Setting out what the options are and what each is exposed to is a study’s job; deciding among them is the attorney’s and the board’s.
Sources
California Constitution, article XIII D, section 6(b)(3), on proportional cost of service. American Water Works Association, Manual M1, 7th ed. (2017), on lifeline and low-income rate structures. State law varies materially and is the controlling authority.