Chandler staff outline utility rate options; council hears proposals for up to 15% water and wastewater increases
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Summary
City staff presented proposed enterprise fund rate changes to cover rising costs and aging infrastructure; officials proposed options—full cost‑of‑service alignment, a blended approach, or equal percentage increases—and recommended public outreach beginning in September with rates effective March 2026.
City budget staff and utility leaders told the Chandler City Council they need revenue increases in the utility enterprise funds to pay for aging infrastructure, higher purchase/treatment costs and planned capital work.
Matt Dunbar and utility staff presented four headline items: a revenue requirement to maintain fiscal sustainability, a cost‑of‑service allocation for customer classes, timing for public outreach and an effective date in spring 2026. As an initial plan staff proposed a revenue requirement of roughly 15% for water, 15% for wastewater, 18% for reclaimed water and 6% for solid waste for the next rate cycle, with an alternate that slightly reduces water and wastewater percentages while preserving the solid‑waste increase. Staff said these are initial revenue requirements and the final rates will depend on a cost‑of‑service allocation and council direction.
Utility staff emphasized the driver: aging water and wastewater infrastructure. They said the water system has about 87 miles of mains rated as high or moderate risk that will require replacement over a multidecade program and noted a planned 30‑year replacement program for those mains. At the wastewater side staff said about 10 miles of high‑risk sewer mains and roughly 7,000 manholes are slated for rehabilitation over long‑term planning, and major transmission projects (a 48‑inch water transmission line and a new 66‑inch wastewater trunk across the Loop 202) are included in the capital plan.
Staff explained the city last completed a full cost‑of‑service study in FY2019–20. Based on the old study, Chandler has been moving toward full cost‑of‑service alignment over several rate adjustments; staff said this next cycle may complete that alignment. City consultants and staff described three approaches for allocating the needed revenue:
- Full cost‑of‑service: use the 2019–20 cost‑of‑service model to allocate the revenue requirement by customer class; staff said that approach risks misalignments because the underlying data are now five years old.
- Blended approach: allocate the revenue requirement that was anticipated in the 2019–20 plan per cost of service, but apply the remainder of the revenue requirement equally across customer classes to reflect inflation and recent changes.
- Across‑the‑board: apply the same percentage increase to all customer classes (for example, 15% water / 15% wastewater / 6% solid waste), then update the cost‑of‑service study in the following year to reallocate differences.
Staff said the city expects to discuss methodology with council this summer, start public outreach in September and seek an effective date for the new rates in March 2026. Public‑outreach materials will explain how a typical residential bill changes under each option; staff presented example monthly bill increases ranging roughly from $3 to $9 depending on the option and customer type. The city also reported scenarios where nonresidential customers could face larger increases under strict cost‑of‑service allocation (one example showed a steep wastewater increase for an average nonresidential customer under full cost‑of‑service).",
Ending
Council members asked staff to develop formal rate‑setting alternatives, continue outreach and bring back a finalized recommendation after community engagement and a refreshed cost‑of‑service analysis. No rate ordinance was adopted at the briefing.
