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Consultant’s cost‑of‑service study leads board to adopt a five‑year, small‑step rate design
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Summary
Jackson Thornton presented water and sewer cost‑of‑service studies showing FY25 revenue requirements and FY30 projections; the board adopted a five‑year rate design that phases modest customer‑charge and volumetric increases to reach near‑full cost recovery by FY2030.
Jackson Thornton consultant Sarah presented the utility’s water and sewer cost‑of‑service studies, concluding that modest, phased rate adjustments are warranted to maintain revenue sufficiency and support planned capital projects.
Sarah summarized the study objectives — revenue sufficiency, equity across rate classes, affordability and defensibility — and walked the board through FY25 base results and a pro forma to FY30. For the water system she said the FY25 total revenue requirement is $18.9 million and “your rates need to bring in $16,800,000,” representing about 99¢ on the dollar recovery. For the sewer system she reported a FY25 revenue requirement of $31.5 million, with rates currently bringing in $27.6 million (recovery above 100% in recent years) and a projected pro forma that will require planned adjustments to absorb future debt service (including a dryer and a planned expansion).
Based on the FY30 projection Sarah recommended small annual increases — for example, 75¢ per year in the customer charge and 10¢ per thousand gallons on the water commodity charge — phased over four years, and analogous incremental increases on the sewer side (about $1 per year on the customer charge and 5¢ on commodity). Sarah framed the approach as “a big fan of small annual rate increases” that ease affordability while preserving revenues for operations and capital.
After discussion—including questions about growth assumptions, how wholesale customers affect recovery and counsel’s reminder to lock in fixed pricing where prudent—the board voted to adopt the proposed five‑year rate design for FY27 and to review rates again at the next biennial cost‑of‑service update.
Why it matters: the adopted design aims to spread necessary revenue increases over several years to avoid sudden large rate shocks while preserving the utility’s ability to fund capital projects like biosolids handling and the planned wastewater expansion.
Next steps: staff will prepare formal rate changes and public notices, with outreach and ordinance/workshop steps identified for implementation.
