Modest water rate adjustment recommended for next yearThe Oro Valley Water Utility is considering only a small change to water costs for rates effecting next July. Water Director Peter Abraham and Water Utility Administrator Mary Rallis presented the annual water-rate analysis to the Water Utility Commission on November 10, emphasizing that the utility can meet its financial obligations with a modest increase to the monthly base rate only. There are no proposed increases to the per-gallon commodity rates that residents pay.
Base rate only increase keeps costs stable
Under the proposal, the typical residential customer with a 5/8-inch meter would see an increase of $1.86 per month. This adjustment affects only the fixed base charge, leaving all potable and reclaimed commodity tiers unchanged. About 84% of Oro Valley customers fall into this meter category. The groundwater preservation fee also remains unchanged at $1.00 per 1,000 gallons.
Abraham and Rallis explained that rising CAP delivery costs and continued 5.5% annual increases in Tucson Water wheeling charges require the utility to secure stable revenue. A base-rate adjustment ensures that essential operating and capital expenses are reliably covered, even if water use fluctuates due to wetter weather or conservation shifts. The utility continues to see customers moving into lower-use tiers, a positive trend but one that reduces variable revenue.
Financial position remains strong
The five-year financial model presented to the Commission shows the Water Utility maintaining required reserves, meeting all debt-service coverage requirements, and keeping the system on a pay-as-you-go footing for existing system improvements. The utility anticipates a small, planned use of cash this year and next, followed by rising balances as older debt rolls off beginning in FY 27-28. Importantly, the debt associated with the Northwest Recharge, Recovery and Delivery System project (NWRRDS) is fully funded through impact fees and groundwater preservation fees, not water rates.
Good news for residents
For residents, the message is positive. The cost of water use is not increasing, the overall financial health of the utility remains solid, and the proposed base-rate adjustment is the smallest step needed to maintain system reliability. The utility does not expect to seek changes to reclaimed-water rates or commodity charges next year. Director Abraham is expected to forward a recommendation to the Town Council early in 2026.
For residents, the message is positive. The cost of water use is not increasing, the overall financial health of the utility remains solid, and the proposed base-rate adjustment is the smallest step needed to maintain system reliability. The utility does not expect to seek changes to reclaimed-water rates or commodity charges next year. Director Abraham is expected to forward a recommendation to the Town Council early in 2026.
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