Peoria staff outline multi-year utility rate increases, council approves notice of intent

Peoria city staff presented results of a multi-utility rate study March 4, asking the City Council to begin the public process for rate increases for water, wastewater and solid waste.

The study, led by Deputy City Manager Kevin Burke, CFO Sean Bridal and Deputy Finance Director Peter Christiansen with consultant Brook Tasha of FCS, recommends a combined average bill increase of 5.5% for fiscal 2026 and 5.1% for fiscal 2027. Staff said that translates to roughly $6 more per month for an average residential customer for each of the two years.

City staff said the recommended adjustments reflect rising operating and capital costs, earlier rate increases and specific project timing. Water increases in the recommendation are 3.5% in both years; sewer would rise about 5.8% (driven by accelerated capital projects), stormwater would see no increase in this cycle, and solid waste would increase 10% in FY 2026 and 8% in FY 2027.

Staff described the utilities as enterprise funds that must recover their costs from users. Bridal said the city runs “five enterprise funds” and that the rate study evaluates cost-of-service, revenue stability, equity and conservation incentives. The presentation cited cost drivers such as capital cost inflation, water-system redundancy, plant expansions and aging infrastructure for water/wastewater; fleet replacement and landfill/recycling market volatility for solid waste.

The study also reviewed current rate structure features: a base monthly water charge of $21.24 for a 3/4-inch meter, a wastewater base charge of $10.84 for a 3/4-inch meter and a residential solid waste flat fee of $23.55 that includes one trash container, one recycling container and two annual bulk pickups. Staff said residential water usage in sample bills is roughly 10,000 gallons per month and wastewater usage is billed on a December–March winter average; the wastewater usage charge cited was $2.36 per 1,000 gallons (per the presentation).

On cost-comparison, staff said Peoria remains toward the lower end among Valley cities for combined bills but noted other cities may be planning their own increases. Staff proposed a 3.5% adjustment to miscellaneous fees (late fees, initiation fees, container relocations) to keep non-rate charges current.

PFAS (per- and polyfluoroalkyl substances) testing and cost risks were discussed. Staff said federal regulation is expected and that the city has tested its wells; one well had previously tested positive and had been taken offline. Staff said the city is still evaluating whether to accelerate treatment investments now or wait until federal standards take effect.

Procedure and next steps: staff told the council that state law requires a formal notice of intent to be adopted 60 days before a public hearing and that a detailed rate report be posted at least 30 days before the hearing. Staff placed a notice of intent on the meeting’s consent agenda; the council approved the full consent agenda by a 7-0 vote. Staff said the public hearing is tentatively scheduled for May 20, 2025, and that, if adopted, new rates would take effect July 1, 2025.

Council members posed operational questions during the discussion, including: how typical household usage maps to the tiers, whether the tiered water structure has been long-standing (staff said about 15 years), how many solid-waste accounts the city serves (staff said about 64,000 accounts) and how many customers use bulk pickup (staff estimated roughly one-third, about 20,000 accounts, based on prior public-works data). Staff said they have not done a full resident survey about bulk pickup preferences.

Nut graf: The study proposes modest multi-year increases meant to preserve cost recovery, support planned capital projects and remain relatively affordable compared with peer cities; the council’s unanimous consent vote advanced the required public-notice step, and the public will have a hearing before any rates take effect.

Details and context: staff reviewed recent rate history — large increases in prior years (water: 12% in FY24 and 9% the following year, sewer smaller increases, solid waste large increases) — and said prior steps have improved revenue performance. Staff said solid-waste costs were driven in earlier years by a fleet facility project and landfill/recycling markets and that the FY26 solid-waste recommendation is lower than previous proposed increases because engineering and project costs had been re-scoped downward.

Several council members asked for additional information staff said they would provide before formal adoption: more detailed distribution of repair-and-replacement funding (asset-management vs. depreciation targets), bulk-pickup utilization data, and further analysis of PFAS cost timing and potential fee structures if federal rules require new treatment costs.

Ending: The council advanced the procedural notice and scheduled the hearing; staff will post a detailed rate report at least 30 days before the May 20 hearing and return to the council with supplemental materials requested by members prior to final adoption.