Moses Lake consultant recommends 5% annual water rate increases, options to realign tiers and meter charges

Moses Lake City officials heard a detailed water rate study presentation on funding needs, proposed rate increases and several rate‑design options at a city study session that the FCS Group presented on behalf of the city.

Consultant Chase Bozette of FCS Group told the council that the study covers 2025–2030 and that the revenue requirement work shows 5% annual rate increases as the baseline. "As a result of this, we're looking at 5% rate increases; the first one in 2025 was already adopted and moving forward with those 5 percents annually," Bozette said. The study projects the water utility needs to maintain reserve targets (90 days of operating expenses plus 1% of assets) and to fund roughly $50.1 million in capital projects over the 2025–2030 planning period.

Why it matters: city staff and the consultant said the increases are intended to keep the utility self‑supporting while smoothing major capital needs that include mains, pressure‑zone work and reservoir and well projects. The study also models bonding in 2027 to help pay for a wave of projects in that year; consultants said the city would issue about $12.5 million in revenue bonds under the central scenario, producing roughly $1.1 million in annual debt service assuming a 20‑year repayment.

Key findings and recommendations - Revenue and reserves: Bozette said the water utility’s annual bill revenue at current (2024) rates is about $9.3 million and that at current rates the system shows an operating capacity of about $2.8 million per year. He said the city should target roughly $2.3 million in reserves in 2025 under the 90‑days + 1% assets target. - Customer growth and capital: the forecast assumes 2.4% customer growth (roughly 300 households per year) and lists developer‑funded improvements of about $6.5 million in 2026 that the consultant said would not affect rates if developers pay them. The consultant identified about $50 million in capital needs across the planning period. - Baseline rate action: the study models 5% annual increases across the period as the revenue requirement solution, with the 2025 increase already adopted. - Cost of service and unit cost: FCS calculated a systemwide cost‑of‑water figure of roughly $1.60 per 100 cubic feet and allocated the revenue requirement into customer/ meter, base, peak and fire‑protection cost pools. The study found single‑family customers were collecting below cost of service, duplexes were collecting roughly 140% of their allocated cost, and irrigation customers were collecting about double the cost of service—largely because high irrigation users fell into newly created top tiers. - Rate‑design options: Bozette walked council through an "à la carte" menu of options: (1) treat duplexes as one meter (align fixed charges per meter rather than per unit) and align duplex usage to single‑family on a per‑unit basis; (2) phase fixed charges so equal meter sizes (residential and nonresidential) pay more comparable fixed amounts; (3) phase multifamily, commercial and industrial usage rates toward the cost‑of‑water ($1.60/100 cf); (4) restore single‑family tiers closer to the 2023 shape (0–1,000; 1,000–3,000; 3,000–5,000; >5,000 cubic feet) and realign per‑tier unit prices; and (5) simplify irrigation to two tiers (0–10,000 cubic feet at approximately cost of water, and >10,000 at a higher rate the consultant modeled at $4.50/100 cf).

Council questions and concerns Council members pressed on distributional impacts and comparatives. Council member Dave Skog asked for concrete bill examples; staff indicated a rate‑calculator Excel tool would be posted for residents and handed out to council. Several council members expressed concern about making large near‑term increases for residential customers: one council member said moving single‑family customers closer to cost of service would raise the typical residential bill by about 8.5% in 2026 under the consultant’s sensitivity checks. Bozette and staff noted that sewer adjustments adopted earlier would offset some combined bill impacts.

Irrigation and large public users drew particular attention. Several council members asked whether the top irrigation tier penalizes large public users such as schools and parks that legitimately water many acres. Bozette and staff said options exist — including tier thresholds keyed to meter size — and agreed to bring back scenario analyses that would test different thresholds or meter‑sized‑based tiers for large irrigation meters. Council members also asked about timing for bond issuance; Bozette said 2027 looked like the earliest realistic issuance date, contingent on audits and the city’s readiness.

Next steps and staff follow‑up Staff told council they will post the FCS rate calculator on the city website and run additional scenarios requested by council — including middle‑path options that would phase adjustments more slowly and scenarios that treat large irrigation meters differently. Bozette said the consultant can phase changes toward cost of service so most classes are within +/-10% of cost of service by 2030 under the modeled options.

Ending: The study session ended with staff agreeing to return with the rate‑calculator tool and two or three alternate scenarios (across‑the‑board 5% increases, the consultant’s recommended restructuring, and a middle path) for council consideration before formal rate adoption.