Monday, February 8, 2021

Water Rate Increase On The Horizon

Water Commission to discuss tonight
Tonight, the Oro Valley Water Commission will hear about a water rate increase from town Water Director Peter Abraham. Abraham plans to offer a water rate increases to council every year. Tonight’s discussion is the first step in the process for a 2021 rate increase.

Potable water rates would increase minimally
The cost of the water consumed will increase minimally, if a proposed water rate increase is approved by council in June. According to Abraham, a user of 15,000 gallons would see an increase of a bit more than a dollar a month. The bill would be about $42 for water. He contends that this cost is 10% less than Metro Water and Marana Water. He is making no recommendation to change the groundwater preservation fee. This is $.90 per gallon consumed. As we have noted previously, much of the cost of an Oro Valley water bill is from fees and taxes added on to the cost of water.

Reclaimed water commodity rate would increase 10 cents per thousand gallons
Under his proposal, the reclaimed water rate would increase by .10 per thousand gallons. Golf irrigation is the primary consumer of reclaimed water. A typical 18-hole course consumes 10 million gallons a month. The cost for this is almost $27,000. The proposed change would increase that to $27,930.

Potable water rate continues to subsidize golf courses

"The town's reclaimed water rate is based on the cost of providing reclaimed water. However, the cost does not include 79% of the debt service cost incurred in building the reclaimed water system. According to town water Director Peter Abraham, reclaimed water would be more expensive than potable water if the the total debt service were included in the reclaimed water rate. This would provide a disincentive if the were set at this level. Town policy is to set the reclaimed water rate at the cost of service, but not more than the potable rate. Town staff and the towns' water commission are recommending to council that this policy remain."

The rate changes this year are comparable for both the potable and reclaimed water rates. This indicates that this subsidy policy continues.

Potable water cost also subsidizes golf because residents pay a sales tax on water used. A half cent of that sales tax is earmarked to support golf.

The town council will hold a public hearing in June on the rate increase. If approved, it will take effect on August 1.