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Safford staff outlines multi-utility rate proposals, warns of capital pressures and possible bill increases
Summary
At a lengthy budget work session staff walked council through a multi-year rate study and proposed utility rate adjustments across water, sewer, electric, gas, landfill and sanitation; staff cited aging infrastructure, CIP increases and commodity spikes and presented example impacts for a typical residential customer.
Staff presented a 26‑slide budget work session on proposed utility service fees and the multi‑year rate study that underlies them. The presentation covered each enterprise fund (water, wastewater, electric, gas, landfill and sanitation), identified capital and market pressures, and proposed timing for potential rate changes.
Key points included:
- Water: Staff described a new tiered consumption schedule that front-loads a 3,000‑gallon base and increases unit charges in higher tiers for heavy users. Staff also proposed a new "multifamily housing" category with a per‑unit base fee ($14.35 per unit) to reflect master‑metered apartment buildings' capacity use.
- Sewer: The wastewater fund is under pressure from recent emergency procurements and larger-than‑expected CIP needs. Staff proposed diversifying revenues by metering effluent deliveries and charging a fee for septic receiving and RV dumping and flagged large effluent uses (e.g., the municipal golf course) as candidates for contract billing.
- Electric: Staff noted a diversified energy portfolio via SPA, ongoing solar adjustments (100% on‑site use retained, 25% credit on excess), and a future substation capital need that could be a multi‑million‑dollar project; staff cautioned against committing large electric rate cuts while capital uncertainties remain.
- Gas: Market volatility for commodity purchase was described as immediate and material. Staff said a commodity charge modeled at $3.75 needs to be adjusted to roughly $4.83, and staff planned a March adjustment for commodity charges and an October adjustment for delivery/service charges.
- Landfill and sanitation: Revenues are running below the study projections, and vehicle/equipment replacement (compactors, collection trucks) and driver market adjustments are creating pressure. Staff discussed modest increases and service‑level adjustments (e.g., frequency and bulky‑pickup policy) as levers to reduce cost pressure.
Staff presented an example combined bill for an "average" residential customer and estimated roughly a $4 per month increase (about $48 per year) under the proposed package, depending on final commodity adjustments and the timing of implementation. Council members asked for additional detail and more time to review, and staff scheduled follow‑up budget work sessions. The council did not vote on rate changes at the meeting; staff sought direction on whether to proceed with the rate assumptions while the budget process continues.
