The Oro Valley Town Council approved a water rate increase last week. The increase will go into effect on July 1. The August billing will reflect the new rates. The town estimates that 87% of residential water users will see a 4% increase in the water cost each month. Reclaimed water users, primarily golf courses, will also see a 4% increase. In both instances, the water rate increases are based on the cost of serving customers.
Residential cost increase because of drought
The primary drive of the residential waterrate increase is the long term drought. One impact is on the cost of CAP water to the town. The town will experience a 20% increase in the cost of CAP water because the CAP Tier 1 shortage (see previous LOVE reports) results in fewer total CAP users. CAP costs are the same. So total cost per user increases. A second reason is the Tucson Water is increasing the cost they charge for delivering this water to Oro Valley by 4%. They will do this for each of the next 5 years.
“Tax Multiplier Effect” makes increase greater
The total increase in water billing will be higher than just for the water increase. This is because of the multiplier effect. That effect is caused because the town charges a sales tax and a utility tax based on dollar usage. This increases the effective potable water rate increase by 10%.
Tucson Water increases cost of Oro Valley reclaimed water 17%
Oro Valley water gets its recla imed water from the City of Tucson. The city increased their charges for reclaimed water by 17%. This is far more than the actual increase of 4% that the reclaimed water users will see. Speaking at last week’s meeting, Oro Valley Water Director Peter Abraham said that 17% cost increase in Tucson Water’s reclaimed water is a one time adjustment based on a cost of service study done by Tucson Water. Abraham said that he has not seen this study.
Tucson Water has been in the news recently because of its position of proposing to “sock it to” water users who reside outside the City. The latest action is a proposal to substantially raise water rates (“differential rates”) to users who live in unincorporated foothills. The city has presented no cost justification to do so. Instead, it has proffered a political reason: “Differential water rates will. drive incorporation of the foothills or annexation.” (Source: Tom Stellar Article on Tucson,.com [subscription required]).
Increases golf course water cost $12k per year
The increase in reclaimed water rates has a significant impact on golf courses, the primary user. “The typical 18-hole turf customer consumes 10 million gallons of water per month.” Their monthly water bill will increase approximately $12,000 annually. This is less than a 17% increase in cost since the rate is based on the town’s own cost of service study.
Expect a water rate increase annually
Last year, the council did not approve the requested water rate increase. The council wanted to keep ratepayer burden at bay during the uncertain early days of the Covid Pandemic. This year’s increase in water rates keeps with Water Director Peter Abraham’s philosophy that annual “small” rate increases are far better for consumers than a large one time rate increase every few years.
“Best deal in town”
According to Abraham, Oro Valley Water is the “best deal in town”. It cost less than other municipalities (See panel) and the quality is excellent. In addition, he said, “we give great service.”
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For more information, see our February report on this water rate increase.