Santa Fe committee hears plan for water rate increase and move to year-round three-tier structure

Director Jesse Roach told the Santa Fe Public Works and Utilities Committee on Dec. 1 that the city is proposing a phased water rate increase and a change to a year‑round three‑tier rate structure to generate revenue for major capital needs and to better align costs with summer outdoor use.

“We haven't raised water rates since 2013,” Director Jesse Roach said, adding that inflation has risen about 41% since then and that several large capital projects have increased the utility’s projected needs. Roach said the four projects discussed — including the Nichols Dam rehabilitation, a McClure project, the Canyon Road water‑treatment plant effort and what was spoken of in the meeting as the “San Juan Tremor return flow project” — will combine to push capital spending toward about $30,000,000 a year over the next five years. He said the utility is seeking about $77,000,000 in loans and grants and plans to raise the city’s fee‑in‑lieu charged to developers (cited in the presentation as rising from $16,600 to about $36,000) to shift some developer contributions toward financial support for projects.

Roach described the proposed rate design change as revenue‑neutral on its own — a move from the current seasonal two‑tier model to a fixed three‑tier structure that would take effect after new billing software is in place. Under the structure change described in the presentation, the first 4,000 gallons of use would be charged at a lower rate year‑round, a middle tier would cover roughly 4,000–7,000 gallons and usage above 7,000 gallons would be billed at the highest tier. Roach illustrated bill impacts: a low user’s winter bill could fall from $25 to $24 and summer from $36 to $34 under the structure change alone, while a very high summer user’s bill could increase from $163 to $215 under the structure change. Roach projected that, combining the phased rate increases and structure change, a typical customer’s bill would increase by around $5 per month over five years if the full package is implemented.

On timing, Roach said the ordinance under consideration would trigger a rate increase in February 2026 if adopted; the rate‑structure change would not begin until January 2027 to allow the new billing software to be implemented. The presentation noted the rate‑structure change itself was intended to shift costs toward high summer outdoor use and to reward low users.

Committee members asked about customer supports. Councilor Castro asked what programs exist for residents who want to use less water. Roach pointed to the Ion Water app, which the utility offers for near‑real‑time monitoring and leak detection. Elsa Castro of the Water Conservation section described rebate programs for efficient fixtures — “rebates for efficient fixtures, toilets, washing machines, dishwashers,” she said — and said the department is developing additional outreach and support tied to the rate change, including incentives for outdoor irrigation equipment and stormwater capture.

The proposed ordinance was listed on the meeting’s consent agenda; the committee approved the consent agenda. The presentation did not record a final adoption of the rate ordinance in committee minutes presented here; the committee moved on to other business after the presentation.