Laguna Niguel City Council members on Tuesday showed disapproval of Moulton Niguel Water District's new rate structure, more than six months after it went into effect.

At the council's request, Water District President Larry McKenney made a presentation to the council on the new system, which was enacted in July of last year.

City Councilman Robert Ming expressed frustration with the policy, which aimed to encourage water efficiency.

"I'll just cut to the chase. I think this policy is horribly misguided," Ming said. "The policy is trying to control people's lives and not the use of water, and that's a problem to me."

The new tier-structure creates water budgets for each individual property owner, residential or commercial, and sets tiers of usage with price per billing unit for each.

For residential services, the conservation tier is $1.34 and efficient is $1.54. The penalty tiers are inefficient at $2.75, excessive at $5.51 and wasteful at $11.02.

Ming went on to say that the district was attempting to control how long a person showered and how green their grass is.

"It's a travesty that it happened in the first place," he said about the rate change.

Councilwoman Linda Lindholm expressed concern about the $2.1 million in additional revenues the water district has received from the penalty tiers.

"The promise was made it was revenue neutral," she said.

She asked to see where the money was going and wanted to be sure it wouldn't be going to salaries.

According to City Manager Tim Casey, the water district has said that any revenues would go into a special fund or account for conservation or rebate programs.

The water district had a tier system before, but the customized budget aspect is new and fees associated with penalty tiers increased, Casey said Wednesday.

At the meeting, McKenney reported that while 70% of customers were initially within compliance when the rate change first went into effect, the number is now up to 87%.

McKenney pointed out that most water districts in the region have a comparable rate system, such as El Toro Water District, San Juan Capistrano, Santa Margarita Water District and Irvine Ranch Water District.

Mayor Paul Glaab recommended that the district come back with a report after taking into account the council's comments.

joanna.clay@latimes.com

Twitter: @joannaclay