South Salt Lake reviews proposed culinary water rate ordinance with tiered consumption charges to fund capital projects

City staff and an outside consultant presented a proposed ordinance on June 11 to amend section 3.11.100 of the South Salt Lake Municipal Code and change culinary water utility fees, including a revised service charge by meter size, new consumption tiers, and front-loaded rate increases to support upcoming capital projects.

Consultant Sean Caroon of HDR reviewed "alternative 2," the recommended rate structure, describing two components: a monthly service charge (varied by meter size) and a consumption charge structured in tiers. He said the changes aim to recover operating and capital costs while maintaining the city's conservation-based rate approach.

"There are a couple of key changes in the recommendations of this rate alternative," Caroon told the council. "Part of this is going through and recovering the costs appropriately, so establishing the cost basis for the rates to fund the operating and capital. And then the second part was maintaining the required conservation based rate structure." He said the proposed service charge maintains a $15 base for the 3/4-inch residential meter and scales upward for larger meters.

For single-family residential customers, the consultant proposed adding a consumption charge for the first 5,000 gallons (which previously was included in the base service charge) and restructuring higher tiers. As presented, the recommended residential consumption charges for the first year of the 2025–26 rate cycle were $4.95 per 1,000 gallons for the mid tier and $5.45 per 1,000 gallons for the highest tier; the consultant said the precise tier sizes were developed from customer consumption characteristics.

Nonresidential and other customer classes were presented with different tier breaks and prices to reflect different usage patterns. As presented, those tiers include a lower per-thousand charge for usage up to larger initial blocks and higher charges for very large consumption: the consultant cited proposed rates of $5.20 per 1,000 gallons for a middle tier and $5.75 per 1,000 gallons for the highest tier for nonresidential customers. The consultant emphasized that the tier sizes and prices were set after analyzing annual and monthly consumption patterns across customer classes.

When asked about the year-to-year percentage adjustments in revenues, Caroon said the increases are "front-loaded" to raise revenues quickly enough to fund both operations and long-term debt service associated with multiple capital projects. "We have some large capital projects in this current year. Those are primarily funded through a low interest loan, which has long term debt service payments that come with it," he said. The upfront revenue increases also aim to maintain reserves, a key factor when seeking long-term borrowing.

Craig (city staff) and Caroon fielded council questions; no formal motion or vote on the ordinance was recorded during the work meeting. The presentation concluded with staff saying they would provide the ordinance language and recommended rates for the council’s formal consideration in a subsequent meeting.