Oro Valley water consumption is declining. "Our customers are conserving water. They are reducing consumption. Even the golf courses are managing their supplies better," noted Phil Saletta, Oro Valley Water Director, as discussed at the Oro Valley Town Council meeting last week.
"Groundwater use has also declined substantially," Saletta noted. This is the result of Oro Valley's decreased demand plus use of two alternate supplies: Reclaimed water and CAP water.
All this is good news for any desert water community.
More good news: There will be no water rate increase next year. This is the third consecutive year with no rate increase. The last increase in water rates was 2009-2010.
There are small water rate increases in our future. This "forecast" is based on a five year projection by the water department of its costs. The largest of these is "debt service". This is the cost of paying interest and principle on borrowing. The analysis includes an estimated 15% increase in electric costs from TEP and an estimated 2% annual increase in operating costs.
The reasons for the "no water rate increase" this year and moderate future water rate increases are:
- Debt service has been reduced. Debt service has been the major source of prior water rate increases. The town has reduced debt service by refinancing debt.
- The use of CAP water defers the need for capital improvements into future years. This water comes to Oro Valley via an inter-governmental agreement with Tucson Water. This agreement has five years to run and is five years renewable.
- The use of CAP water and reclaimed water substantially reduces ground water fees paid to the State.
The water department has issued a request for proposal to do a Cost Of Service study. This study will result in an analysis of customer classifications. It may result in a shifting of rates to a new class of service or among existing customer classes. This study will be completed in 2013.
Factoid: The department projects 70 new metered connections annually.
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1 comment:
First, let me say that the Oro Valley Water Utility is the most efficient and well run organization in the Town of Oro Valley Government. They are fiscally prudent and very transparent on their sources of revenue and expenses.
However, that being said, there are important pieces of information contained within the Water Rate Report that should be noted by the citizens of Oro Valley.
History
• The Water Utility has experienced an overall reduction in water use, both potable and reclaimed, and the growth rates have significantly decreased over the last seven years. (FY2005-2006 through FY2011-2012, Page 5). There is no historical chart that shows the water rates and groundwater preservation fees that have been charged for the last seven years.
• An analysis showed that about 252 meters were disconnected: Residential 137, Commercial 10, Irrigation 95, Construction 10, Page 6.
• This decline in water usage has resulted in lower revenue from water sales and groundwater preservation fees (GPF).
o The water sales billing from citizens and commercial businesses goes into an operating fund that is used for personnel, operations and maintenance, capital for existing potable water system improvements and debt costs, Page 3.
o The Groundwater Preservation Fee (GPF) is collected through the water utility billing and then is transferred to the Alternative Water Resources Development Fee Impact (AWRDIF) Fund.
• There are two impact fee funds
o An impact fee is a fee that is imposed by a local government within the United States on a new or proposed development project to pay for all or a portion of the costs of providing public services to the new development.
o The Alternative Water Resources Development Fee Impact (AWRDIF) Fund was established in 1996 to manage capital expenditures related to alternative water resources including reclaimed water and the Central Arizona Project (CAP) water. However, the bulk of the revenue comes from GPF fees instead of limited impact fees to manage these capital expenditures.
o The Potable Water System Development Impact Fund (PWSDIF) was established in 1996 to manage capital costs related to expansion and growth-related potable water. The bulk of the revenue comes from impact fees from the sale of new water meters. However, some of the revenue comes from the operating fund for existing capital expenditures, Page 3. Only capital costs related to expansion and growth-related potable water come from this impact fund, Page 3.
Future
The operating fund water sales rates are projected to increase from FY2013/2014 (0.8%), FY2014/2015 (0.9%), FY2015/2016 (1.0%), FY2016/2017(0.9%), Appendix A-1.
It sounds like the collection of impact fees for capital costs will be minimal unless there is an economic recovery.
The Water Utility issues a Water Rate follow-up Report each year to monitor whether significant conditions have changed their assumptions.
John Musolf
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