Philomath council advances framework for water rate changes as treatment-plant costs rise

Philomath City Council met in a work session on Oct. 13 to continue discussion of a consultant-led utility rate study and to give staff direction on how to draft final rate proposals.

Councilors heard staff and consultant summaries explaining that the city’s planned water treatment plant has increased in cost from an original $12,000,000 estimate to about $16,000,000. Councilors were asked to shape how much of the water system’s increased revenue burden should come from a fixed monthly base charge versus usage-based (volumetric) charges, and to advise on related tools such as a multifamily-meter methodology, an elevation surcharge and charges for private fire lines and hydrants.

The short-term fiscal problem driving the discussion is that construction and other costs have risen since the original grant award, leaving a gap the utility must cover. Staff said part of the increased capital cost has been shifted to system development charges (SDCs) for future growth but that a substantial share must be recovered from current customers and rates.

On the key policy choices, councilors gave staff the following guidance to prepare a draft rate package for the council’s next meeting: assume the consultant’s recommended shift in the revenue split so the fixed (base) portion of total water revenue increases from about 25% of total revenue to 30%; implement a tiered volumetric rate structure (the council settled on drafting three tiers for review); align multifamily billing with the new methodology the consultants proposed; and include an elevation surcharge in the draft (staff and councilors discussed options for phased implementation and grandfathering). Councilors did not take a formal vote at the session but the mayor instructed staff to model the 25%→30% base share for the next packet.

Councilors raised equity and implementation concerns. Several members said they were wary of sudden new charges for long-term residents at higher elevations; others argued an elevation surcharge more fairly matches the system costs of pumps and pump-station generators. Councilors asked staff to show modeled dollar impacts on typical households (how many dollars per month the changes would mean for low-, median- and high-usage households) and to return with the numbers before any final adoption.

On volumetric design, the council favored moving away from a single flat per-unit usage price and asked staff to draft a three-tier schedule. Staff and councilors noted that most households (about 90% per the consultant materials) consume 12 units or fewer and that tiers are intended to let basic indoor use be billed at a lower rate while higher-volume (irrigation/large-lawn) use pays more.

Private fire lines and private hydrants drew particular concern. Staff reported the city currently does not meter many private fire connections and does not recover the city’s readiness or capacity costs from those private accounts. Councilors agreed to table immediate adoption of the consultant’s private-fire-line fee schedule and asked staff to study competitive and economic-development impacts and implementation options (including whether to meter private lines or apply a nominal readiness charge). Staff noted a uniform hydrant charge would be proposed for fiscal year 2026 (the presentation cited a $15.20 monthly uniform charge as an example for FY26 with a possible tiered approach in FY27), but councilors requested more analysis before adopting new charges.

Councilors also discussed longer-term supply and conservation options, including aquifer storage recovery as a way to reduce summer reliance on surface flows. Staff told the council the city has senior and junior water rights and that curtailment by the Watermaster has not produced a practical supply shortfall in recent years; aquifer storage recovery was mentioned as a way to reduce vulnerability during low-flow months.

Next steps: staff will build rate models that reflect the council’s direction (including a 25%→30% base-share scenario, a three-tier volumetric structure, multifamily-billing changes, and an elevation surcharge option) and return with dollar-level examples and an implementation timeline for the council’s review. The council recessed the work session without taking final votes and asked staff to bring a draft ordinance or rate schedule for formal consideration at a subsequent public meeting.