Title
Public Hearing - Proposed Water Service Revenue Increase
Description
Request to hold a public hearing to receive comments on proposed amendment to Section 37-63 of the Phoenix City Code, to provide for an increase in revenues for water service by modifying water rates and decreasing the base allowance of water included with service. This hearing is held in accordance with Arizona Revised Statute 9-511.01.
Report
Summary
Phoenix water rates remain among the most affordable in major cities throughout the Southwest. The proposed increases apply to the volume charges assessed on the water that is used above the modified base allowance amount included in the fixed monthly service charge. As a result of the increase, approximately 17,000 or 4.3 percent of current residential customers, whose usage is under the allowance, will be impacted if they made no changes in their current water usage. The impact of the proposed rate modification to the average single-family home is estimated to be approximately $17 over the three-year period starting on March 2023. If customers reduced their monthly usage by conserving water, and do not exceed the new allowance amounts, the customers would not see any increase in their water charges.
Public Outreach
Information detailing the proposed decrease in the base allowance of water included with basic water service to 800 cubic feet in the summer months and 500 cubic feet in the non-summer months, from the current level of 1000 cubic feet in the summer months and 600 cubic feet in the non-summer months, and the proposed water revenue increase of 26 percent over a three-year period of calendar years 2023, 2024 and 2025 is available to the public in the City Clerk Department of the City of Phoenix located at 200 W. Washington St., 15th Floor. Information is also available on the City of Phoenix website: https://www.phoenix.gov/waterrates.
During the months of March, April, May and June information on the proposed rate increase and changes to the base allowance, was mailed to all water account holders through the City Services bill and PHX at your Service (PAYS). A total of 35 community outreach meetings were held to present information and obtain feedback, and numerous media interviews and social media posts occurred (Attachment A). The Citizens’ Water and Wastewater Rate Advisory Committee recommended the proposed revenue increase, citing that it would generate the revenue required to maintain a reliable and cost-effective water services, and invest in the future of the City of Phoenix. The rate revenues proposed will offset financial pressure imposed by substantial increases in costs to supplies and materials due to inflation and maintain an adequate fund balance to retain a AAA bond rating. (Attachment B).
Concurrence/Previous Council Action
On April 18, 2023, the City Council heard the Notice of Intention to consider an increase in water rates and/or rate components and set a public hearing date to consider the proposed increase.
On Jan. 26, 2023, the Citizens' Water/Wastewater Rate Advisory Committee recommended:
- Water rate revenue increases of 6.5 percent effective October 2023, 6.5 percent effective March 2024, and 13 percent effective March 2025.
- Decrease the allowance to 800 cubic feet in the summer months and 500 cubic feet in the non-summer months from the current level of 1000 cubic feet in the summer months and 600 cubic feet in the non-summer months.
On Feb. 15, 2023, the Transportation, Infrastructure, and Innovation Subcommittee:
- Heard information on the proposed rate revenue increase that included updates on the financial plans and inflationary pressures.
Department
Responsible Department
This item is submitted by Deputy City Manager Ginger Spencer and the Water Services and Finance departments.