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Oro Valley Water Utility Commission recommends modest base-rate increase, keeps groundwater preservation fee unchanged
Summary
The Oro Valley Water Utility Commission recommended a potable base-rate–only increase for FY 2026–27 that would raise the base charge for most customers by $1.86 per month (about 3.6%) and voted to leave the groundwater preservation fee at $1 per 1,000 gallons. Staff cited rising CAP delivery and wheeling costs and projected the town will meet its cash-reserve requirement under the proposal.
The Oro Valley Water Utility Commission on Monday reviewed its 2026 work plan and voted to recommend a modest potable base-rate increase to the town council while leaving the groundwater preservation fee unchanged.
Director Peter Abraham summarized the staff recommendation and the water-rate model that underpins it, saying the approach prioritizes revenue stability, debt-service coverage and conservation. “Eighty-four percent of our customers would see a dollar eighty-six per month increase in their water bill,” Abraham said, describing that figure as the base-rate change for a typical 5/8-inch meter customer using about 7,000 gallons a month. The recommendation is a base-rate–only adjustment; staff proposed no change to the commodity tiers or reclaimed-water rates.
Abraham identified several cost drivers behind the recommendation, including higher Central Arizona Project (CAP) delivery and wheeling charges. Staff described a 7.46% increase in a CAP delivery charge this year and said wheeling costs paid to Tucson Water have risen, putting upward pressure on the utility’s operating costs.
Under the staff projection for FY 2026–27, the cash-reserve requirement (20% under town policy) is about $3.7 million and projected cash on hand would be roughly $4.7 million, leaving an approximate $1 million surplus if the recommended increase is adopted. Abraham said the commission should nonetheless review cash-reserve policy metrics, including days-of-operations measures, at a future meeting.
The commission also reviewed the Northwest Recharge Recovery Delivery System (NWRDS), the utility’s largest capital project. Staff said the NWRDS is expected to be completed in early 2027 and is being funded predominantly by impact fees and the groundwater preservation fee (GPF); staff characterized the GPF as a restricted fund dedicated to renewable-water capital and related debt.
For FY 2026–27 staff projected GPF revenue of about $2.7 million and GPF expenses of roughly $2.2 million. “It’s doing what it needs to do,” Abraham said in explaining why staff recommended no change to the $1 per 1,000-gallon GPF. The commission moved and carried a voice vote to recommend to council that the fee remain unchanged.
Abraham outlined the procedural timeline for rate-setting: the commission will present its recommendation to town council, which will publish a notice of intent in March; a public hearing is projected for early June and, if adopted, new rates would become effective 30 days after adoption in July. Abraham said staff expect to continue providing quarterly financial reports and an annual report that will offer more detail on debt schedules and cash-flow projections.
What’s next: the commission will forward the rate recommendation and the GPF recommendation to Oro Valley’s town council for the formal notice and public-hearing process required under town policy.
