Kalamazoo utility advisers endorse 5% systemwide revenue increase; staff favors gradual shift by customer class

Stantec consultant Danica Katz presented a financial plan and follow-up cost-of-service analysis to the Kalamazoo City Utility Policy Committee on Aug. 14 that recommended a 5% overall rate increase for the water system in 2026.

The study used the city’s FY2025 budget as the baseline, assumed 1.1% annual customer growth and a 10-year capital program with annual capital needs of about $40 million to $80 million (modeled at 75% execution). Katz told the committee the consultant team was modeling an overall 5% revenue increase for 2026 and testing three ways to distribute that revenue across customer classes to move each closer to full cost recovery.

Why it matters: the committee must balance system financial stability, regulatory obligations and evolving meter and customer data. Staff and consultants said the largest driver of revenue needs is capital spending for station reliability, lead service line replacement and a ramp-up of smart meters; the panel set a schedule to consider a UPC recommendation in September and to take rates to the city commission at the two October…