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Milwaukie staff flag PFAS treatment and potential rate increases as utility study continues
Summary
City utility staff told councilors that a rolling five-year average shows about a 1% annual increase in typical residential utility fees, but PFAS treatment and other recommendations from an upcoming rate study could require a near-term revenue increase of about 8% for water, prompting discussion about tiered rates and targeted discounts for low-income customers.
Peter, a utilities staff member, told the council the rolling five-year average for a typical single-family residential customer is “about 1%” — later cited as “1.07%” — when the city spreads fee changes across multiple utility charges. The presentation described stable wastewater charges, small adjustments to fixed customer charges and a decline in the construction-cost inflator that affects some fees.
The city has not yet built the expected cost of PFAS treatment into current rates. Peter said the capital expense for PFAS treatment will likely hit the utility budget in the next fiscal year; a consultant'led review of water rates due in April could show an 8% revenue increase is needed to cover water program costs. Staff said wastewater and stormwater are not slated for increases in the recommendation; transportation fees and some other charges are indexed to the construction-cost index.
Councilors pressed staff on equity and program design. One councilor asked, “So where's the relief?” noting that small percentage changes may not be tangible for households paying monthly utility bills. Staff and councilors discussed expanding enrollment and outreach for existing low-income discounts and adding a third consumption tier so that low-volume users receive additional relief while higher-volume usage is charged incrementally.
Staff also described operational steps the city is taking to limit future rate pressure: reprioritizing the capital improvement program (reducing the multi-year CIP from about $125 million to roughly $80 million), streamlining billing platforms to reduce costs, and auditing account data to capture missed revenue or correct database records.
The council asked for clearer fee descriptions in the fee schedule so residents can understand what SDCs and other line items cover. Staff said they will bring the consultant's water-rate presentation and a revised fee schedule to the council on April 14 for formal review and follow-up discussion.
The city will continue outreach on utility-assistance programs and hold public sessions to help residents apply. Staff recommended promotional work to increase enrollment in discounts and to explain proposed rate design changes before any formal rate adoption.
