Oro Valley residents will likely see an increase in their water bills in August as the town’s Water Utility Commission recommends increases to both base rates and commodity rates. According to the recently released Water Rates Analysis Report, the changes are necessary to maintain financial stability while funding operational costs, infrastructure improvements, and debt obligations. The report states that the rate increases will help the utility recover fixed and variable costs while ensuring compliance with financial policies and bond covenants. The report, along with a request for the Town Council to approve notice of a water rate increase, will be presented to the Oro Valley Town Council tonight.
Base and commodity rates will increase
The report proposes an increase in the drinking water base rate and a commodity rate hike per 1,000 gallons used. For residential customers with a 5/8-inch meter—the most common size in Oro Valley—the monthly base rate would increase by $1.11, while the commodity rate would rise by $0.10 per 1,000 gallons. This means that a household using 7,000 gallons per month would see their bill increase by $1.81 per month, a 3.8% increase over current rates. However, the actual impact on water bills will be greater because sales and utility taxes are added, further increasing the cost.
According to the Water Rates Analysis Report, water rate increases are attributed to rising operating costs, inflation, and the need to maintain adequate cash reserves in the utility’s operating fund. Additionally, Water Utility Director Peter Abraham advocates for annual rate increases, believing this approach smooths out financial impacts on residents. However, this philosophy failed residents last year when the Town Council approved a significant increase [See panel right].
The Water Utility Commission and town staff defend the increases also citing the need to meet debt service coverage requirements and maintain financial reserves at a safe level. The current proposal projects that the water utility operating fund will retain a cash balance of over $5.4 million by the end of the five-year period, exceeding reserve requirements. They claim this financial stability will allow Oro Valley to continue funding capital improvements while keeping rate increases “modest.”
And NWRRDS project requires more funding
Another key driver of future costs is the Northwest Recharge, Recovery, and Delivery System (NWRRDS) project, which will deliver Central Arizona Project (CAP) water directly to Oro Valley from the Avra Valley ponds. The estimated cost of this project has increased significantly since its conception. According to the report, the town plans to issue $17 million in new debt to support this project this fiscal year, with debt service payments funded through the Groundwater Preservation Fee and the Water Resource and System Development Impact Fee Fund.
The Town Council will review the water rates report tonight and is expected to approve the posting of a notice of a water rate increase. Following this, the council will hold a public hearing before they approve the new rates in June. Approval is virtually a certainty. Very few, if any, speak at the public hearing and water rates are comparable to other communities [Panel left]. This Council has never altered a request for nor denied a water rate increase request. Once approved, the new rates will take effect in August 2025.
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About the Oro Valley Water Utility
The Oro Valley Water Utility operates as an enterprise fund, meaning it is financially separate from the town’s general operations and funded solely by water service charges rather than tax dollars. It provides potable and reclaimed water to residents and businesses while managing infrastructure, conservation efforts, and long-term resource planning. The utility’s revenues cover all operational costs, debt service, and capital improvements, ensuring that water-related funds are not used for other town services. The town does provide the utility some administrative and vehicle maintenance services for fees that are "negotiated" between the utility and the town itself. Oversight is provided by the Oro Valley Town Council, which reviews and approves rate adjustments and financial plans to maintain a stable and sustainable water supply for the community.
About the Oro Valley Water Utility
The Oro Valley Water Utility operates as an enterprise fund, meaning it is financially separate from the town’s general operations and funded solely by water service charges rather than tax dollars. It provides potable and reclaimed water to residents and businesses while managing infrastructure, conservation efforts, and long-term resource planning. The utility’s revenues cover all operational costs, debt service, and capital improvements, ensuring that water-related funds are not used for other town services. The town does provide the utility some administrative and vehicle maintenance services for fees that are "negotiated" between the utility and the town itself. Oversight is provided by the Oro Valley Town Council, which reviews and approves rate adjustments and financial plans to maintain a stable and sustainable water supply for the community.
