City consultant presents proposed culinary water rate changes; council reviews cost‑of‑service alternative

At a June 11 work meeting, Craig (presenter) and Sean Caroon, a consultant from HDR, reviewed an alternative rate structure and an ordinance amendment to South Salt Lake Municipal Code section 3.11.100 that would change culinary water utility fees. The proposal adjusts monthly service charges by meter size, introduces a consumption charge for the first 5,000 gallons that previously was included in the base charge, and establishes new tiered consumption rates for residential and nonresidential customers.

The change is intended to reflect the utility’s cost of service, support operating and capital needs and maintain a conservation‑based rate design. Consultants said revenue increases are front‑loaded to cover near‑term debt service for planned capital projects and to preserve reserves that lenders review when issuing long‑term debt.

Sean Caroon of HDR described the recommended residential structure, noting the 3/4‑inch meter service charge would remain at $15 per month and meter charges increase with meter capacity. He said the current consumption design includes the first 5,000 gallons in the base charge and two higher blocks; under the proposed residential structure the next tier (5,000 to 15,000 gallons) would be charged at $4.95 per 1,000 gallons and all usage above that at $5.45 per 1,000 gallons. "So that 5 to 15,000 represents the next tier of typical indoor and some outdoor use. And so that's $4.95 per thousand, and then everything over that would be $5.45 per thousand," Sean said.

For nonresidential customers, Caroon said consumption patterns differ and proposed tiers with larger first blocks: 0 to 30,000 gallons at $3.25 per 1,000 gallons, 30,000 to 125,000 gallons at $5.20 per 1,000 and above 125,000 gallons at $5.75 per 1,000. Consultants explained those tiers reflect different usage profiles while meeting the overall revenue and cost‑of‑service goals.

A council member asked why revenue adjustments are larger in early years and taper later. Caroon said early increases are designed to fund ongoing operations and the debt service tied to large capital projects planned in the near term, and to maintain reserves. "So that upfront loaded is to enable us to pay for our annual O and M, as well as then paying for that annual debt service as we go forward," he said. He added that reserves are important when pursuing long‑term borrowing because lenders evaluate those reserves as part of repayment capacity.

No formal vote on the ordinance was recorded during the work meeting. Staff closed the presentation after taking questions and said the item would proceed through the council’s normal ordinance review process.