Oro Valley council sets public hearing on proposed water rate increases, approves notice of intent

The Oro Valley Town Council on March 5 approved a resolution to publish a notice of intent to raise potable water base and commodity rates and set a public hearing for June 4, 2025, voting 7-0.

Town water utility director Peter Abraham said the increases are intended to cover rising Colorado River delivery costs and to “cash‑firm” the utility’s operating reserve. "CAP's allocation price increased about $25 an acre‑foot this year — roughly an 8.9% increase — and that affects our commodity cost," Abraham said during the council meeting.

The notice does not itself change rates; it begins the statutorily required public review process. The town clerk was directed to publish the notice and the water rate analysis report; if the council adopts new rates after the hearing, staff said they would take effect 30 days after adoption, about July 5, 2025.

Why the change matters

Abraham told the council the two primary drivers are (1) higher Central Arizona Project (CAP) commodity costs and (2) a planned increase to ensure the utility meets its operating cash‑reserve target. "We must ensure we have sufficient buffer for unplanned expenditures and sales volatility," Abraham said. He said the rates proposal would firm reserves and let the utility continue to cash‑fund much of its ongoing capital work.

What staff proposed

- A modest base‑rate increase that staff characterized as a resource‑access fee; 84% of customers, those with 5/8‑inch meters, would see a $1.11 per month increase in the base charge under the staff proposal. - Small increases to the commodity charge in tiers 1 and 2; tiers 3 and 4 were not proposed to change after larger increases last year, a pause intended so staff can measure behavioral effects.

Abraham said the utility plans to cash‑fund existing system rehabilitation projects totaling roughly $10.8 million over the five‑year projection and will borrow only for the large Northwest recharge/recovery/delivery system (NWRRDS) project. He also said debt coming off the utility’s books in later years should reduce future rate pressure.

Council questions and vote

Vice Mayor Barrett suggested smoother, smaller increases over several years to avoid rate shock. Council members praised the water utility commission’s role in rate development; Councilmember Murphy thanked the commission for its work. The motion to publish the notice and set the hearing passed 7‑0. The motion was made by Mayor Winfield and seconded by Councilmember Green.

Next steps

Staff will post the full water rates analysis in the town clerk’s office and on the water utility website and will return to council for the June 4 public hearing. If council adopts rates after that hearing they would take effect about July 5, 2025.