Spokane utilities director previews 3.5% annual rate plan and a new micro-unit sewer rate

Marlene Feist, delivering the utilities director's report to the Public Infrastructure and Environmental Sustainability Committee, outlined a proposed multi-year rate framework that would raise water, wastewater and stormwater rates by about 3.5% annually for 2027 and 2028 to fund capital projects and manage debt.

Feist told the committee the increases would support roughly $50,000,000 in yearly capital work across the system, continue scheduled asset replacements and cover green-bond debt service. She said the city could reduce the 2027 increase to 3% if the council opts to roll back the temporary half-percent utility tax that was adopted last year.

The presentation emphasized a cost-of-service analysis that, staff said, shows commercial sewer customers have been underpaying while multifamily units have been overpaying. To correct that, staff proposed restructuring sewer base charges so that customers with larger water meters pay more of the fixed-cost burden; Feist acknowledged that a subset of large-meter commercial customers would see a sizable jump but said most commercial accounts would see roughly the 3.5% increase.

Council member Cathcart pressed staff to consider phased implementation for customers facing very large single-step increases; Feist agreed to explore phase-in options and to provide detailed bill samples.

Feist also proposed a new micro-unit rate for small multifamily units, defining a micro unit as 350 square feet or less and proposing a charge equal to about 60% of the multifamily unit rate for both sewer and wastewater capital fees. Staff said the micro-unit rate aims to improve equity and affordability for very small units, and that the billing system will require a short implementation period during which existing units must self-identify and new units will be flagged through the developer services process.

On affordability measures, Feist noted the city doubled discounts for qualifying seniors and disabled customers and increased the low indoor water user discount, which produced a large enrollment uptick. She said utility staff will keep outreach and enrollment efforts underway and continue to pursue federal assistance programs such as LIHEAP/LIHWAP.

Staff described three options for commercial water pricing to incentivize conservation: keep the existing structure, adopt a uniform year-round rate, or adopt seasonal rates (higher in June'September and lower in winter). Feist said staff favors a seasonal approach to target summer conservation while preserving a stable, year-round rate for parks and schools.

Feist said staff will bring refined proposals and sample bills to the Finance Committee on July 28 and intends to present ordinance packages for council consideration in September'October 2026 so any adopted rates can feed into the budget. She warned that other cost pressures'including labor negotiations, volatile materials and energy costs, and upcoming Climate Commitment Act obligations'could affect final numbers.

On that last point, Feist explained the Climate Commitment Act treatment for the city's waste-to-energy facility: the city receives no-cost allowances for emissions in the near term but must "consign" 30% of those allowances to the Department of Ecology, which creates an approximate $2.8 million to $3.0 million per-year cost in 2027 and 2028 that staff expects will be addressed in the separate solid-waste rate proposals.

The committee asked for more granular customer examples; Feist said staff will return with representative bill impacts for multifamily, small commercial and large commercial accounts and will model phasing alternatives before bringing ordinance language for adoption.