In the latest fallout from the worsening drought, residents of San Jose — which received the lowest rainfall in its recorded history last year — and surrounding communities are about to be given tougher water conservation rules than any major city in California.

The San Jose Water Company, a private firm that provides drinking water to 1 million people in San Jose, Cupertino, Campbell, Los Gatos, Saratoga and Monte Sereno, has begun sending notices to residents informing them it is moving forward with mandatory rules to set monthly residential water budgets with financial penalties for homeowners who exceed them.