Title
Reconsideration of Item 42 from the Dec. 12, 2018 Formal Council Meeting - Amend City Code - Proposed Water Service Rate Increase (Ordinance G-6541)
Description
Request the City Council amend sections 37-63 and 37-133 of the Phoenix City Code to adjust water service rates to increase rate revenue by 6.0 percent effective the first bill-day of February 2019, followed by an additional increase of 6.0 percent effective the first bill-day of February 2020.
Report
Summary
The Finance Department, in conjunction with the Water Services Department, develops a Water Financial Plan to determine the revenue requirements that support the capital infrastructure replacement, rehabilitation, and development needs, the operating budget, and the debt service requirements of the water utility. The proposed changes to the water rates planned for February 2019 and February 2020 are estimated to produce $24.1 million of additional revenue in the first full year and an additional $25.0 million in the second full year.
The proposed water rate changes for February 2019 will be applied to the fixed monthly service charge, seasonal volume charges, and the environmental charge. On average, customer bills for water will increase 6.0 percent. Depending on the actual water consumption, some customers may pay more or less than this average.
The proposed water rate changes for February 2020 will be applied to fixed monthly service charge, seasonal volume charges, and the environmental charge. On average, customer bills for water will increase 6.0 percent. Depending on the actual water consumption, some customers may pay more or less than this average.
An independent rate consultant has reviewed and evaluated the Water Financial Plan and determined that the financial plan information supports rate adjustments that are reasonable and consistent with rating agency standards (Attachment A).
There is no increase to wastewater rates in either 2019 or 2020.
Concurrence/Previous Council Action
The citizens' Water/Wastewater Rate Advisory Committee unanimously recommended that the City Council approve the water rate increases at its Aug. 16, 2018, meeting. The City Council Water, Wastewater, Infrastructure, and Sustainability Subcommittee heard information on water resources, infrastructure, and financial plans at its Sept. 5, 2018, meeting. The City Council heard a report on water resources, infrastructure, and financial plans at the Oct. 9, 2018, Policy Session (Attachment B). The Notice of Intention to consider an increase in water rates and/or rate components and to set a public hearing date to consider the proposed increase was passed unanimously at the Oct. 9, 2018, Policy Session. The public hearing to consider this amendment is on this same agenda.
Public Outreach
In accordance with Arizona Revised Statute 9-511.01, the City Council will conduct a public hearing on Dec. 12, 2018, to receive comments on the proposed increase in water rates. Additional information regarding public outreach efforts is detailed in the Council Report for the public hearing agenda item.
Department
Responsible Department
This item is submitted by Deputy City Manager Karen Peters and the Water Services and Finance departments.