The Oro Valley Water Utility Commission on Nov. 10 voted to recommend a modest increase to potable water base rates to the Town Council, approving a proposal staff said would add $1.86 per month to the typical 5/8-inch customer bill while leaving commodity tiers and the groundwater preservation fee unchanged.

Staff presented a five-year rate model and a schedule that would allow the council to receive notice in March and hold a public hearing in June. "Our recommendation is an increase to potable base rates only, no change to the potable commodity tiers," said Peter, a water utility staff member leading the analysis, who said the change would give the utility predictable, guaranteed revenue. Peter gave an example showing a 5/8-inch meter billed at 7,000 gallons per month would move from $23.31 to $25.17 per month under the proposal.

Why it matters: Staff said the proposal is intended to avoid a sudden "rate shock" for customers while shoring up reserves and meeting debt-service coverage requirements as certain debt obligations phase off in later years. The recommended change is framed by previous commodity-rate increases that staff said already have encouraged conservation; the base-rate approach aims to provide steady income even in lower-consumption years.

What the commission considered: The presentation separated operational rate revenue from restricted funds. Peter emphasized that groundwater preservation fees (currently $1 per 1,000 gallons), impact fees and debt tied to the NWRDS project are restricted and were excluded from the operational rate-setting model so they could be reviewed separately. He also described conservative modeling assumptions — including an 800,000 acre-feet scenario for CAP deliveries — and a five-year pro forma that shows a near-term dip in cash reserves followed by recovery as existing debt comes off.

Commissioners pressed staff on the analysis and trade-offs between equity and conservation. "If you’re in tier 1 you’re being subsidized by tiers 2, 3 and 4," Peter said, explaining why staff proposed a base-rate increase rather than commodity adjustments. Commissioners also discussed days-cash-on-hand and industry guidance suggesting 90 days as a minimum reserve target; staff said the plan includes conservative assumptions and vacancy savings that reduce risk.

The vote and next steps: Commissioner David Attler moved to forward the commission's recommendation to Town Council; Commissioner Alan Forrest seconded. The commission carried the motion by voice vote (all in favor). Staff said that, if council approves the notice of intent and follows the schedule laid out by staff, a council public hearing would occur 60 days after the notice and any adopted rate changes would take effect 30 days after adoption.

Other business: The commission also voted to dispense with the December meeting to allow staff time to refine presentations on groundwater preservation fees, impact fees and debt service. Director/administrative staff also recognized Commissioners Tom Merrick (termed out) and Commissioner Adler for their service.

The commission adjourned after closing remarks; staff encouraged commissioners to email follow-up questions on presentation clarity.