Discussion and possible action to adopt RES. 2025-66 regarding a proposed adjustment to the water and wastewater rates, making the new rates and fees effective July 4, 2025 and July 1, 2026.

Water and wastewater rates and charges are adjusted from time to time to ensure water and wastewater system revenues cover operating and capital costs, provide revenue and rate stability, and achieve equity and conservation objectives.

City staff presented the recommended water and wastewater rate adjustments to Council at the March 4, 2025 Council Study Session. The presentation included discussions on the factors influencing the rate adjustments including the drought, increasing water delivery costs, and repairs and maintenance of aging infrastructure. Inflation is also driving up the cost of electricity, chemicals and other materials and supplies.

Over the past year, the city’s rate consultant, FCS, worked with city staff to conduct a water/wastewater utilities rate study. The cost pressures on the utilities system and proposed rate adjustments are addressed in detail in the final FCS rate study report.

The City complied with the requirements of ARS §9-511.01 by notifying the public of its intent to consider a rate adjustment in a public newspaper at least 20 days prior to the public hearing date and has made a written report available with the Office of the City Clerk and on the City website at least 30 days prior to the public hearing date.

Council is asked to hold a public hearing and consider formal adoption of the recommended water and wastewater rates and charges as the final steps in the rate setting process for water and wastewater.

If adopted, the new water and wastewater rates and various administrative fees for FY 2026 will be effective on July 4, 2025 and the new rates and fees for FY 2027 will be effective on July 1, 2026.

At the March 4, 2025 City Council Study Session, staff presented the recommendations for water and wastewater rates and discussed the operating budget and capital program factors that are influencing the recommended rate adjustments.

At the March 4, 2025 City Council Meeting, the City Council adopted the statutorily required Notice of Intention to adjust rates and charges, notifying the public that adjustments to water and wastewater rates and fees would be considered in a Public Hearing. This Notice was published in the Peoria Times newspaper during the week of April 28, 2025 to comply with state statutes applicable to water and wastewater rate setting.

Staff recommends Council adopt the resolution adjusting water and wastewater rates and fees as presented.

The proposed water and wastewater rates and fee adjustments provide the revenues necessary for the utility systems to ensure cost recovery, fund capital projects, and meet rate objectives of revenue stability, equity, and conservation.

The rate adjustments are also necessary to ensure compliance with the City’s reserve and debt service coverage policies within its Principles of Sound Financial Management.  

As shown in Exhibit 2, the average residential customer currently pays $81.56 for water and wastewater services. The proposed rate adjustment would increase the typical residential customer’s water and wastewater charges by 4.3 percent or $3.52 in FY 2026 and by 4.3 percent or $3.69 in FY 2027.

With these rate adjustments, the City's water and wastewater rates continue to be affordable and among the lowest when compared to peer cities in the Phoenix metro area.