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City proposes 2027 utility rate changes, including a $3.15 water-supply fee to finance regional project
Summary
Staff outlined proposed 2027 utility rate changes to support the Red River Valley Water Supply Project, including a new average $3.15 monthly water-supply fee, phased-in block changes and an overall model staff say needs an average $14 residential increase to rebuild reserves; commissioners asked for more granular $1-revenue yield and multi-year scenario modeling.
City utility staff told the finance committee they are proposing rate changes for 2027 driven primarily by a new Red River Valley Water Supply Project fee and rising treatment and chemical costs. Staff described the water-supply charge as an "average $3.15" fee to help finance the regional diversion project and said the charge would be shown separately on customer bills. "That $3.15 average really helps us ... support the project and get ready to support our users that also purchase water from the city of Fargo," one presenter said.
Staff outlined options to phase increases over four years, adjust block structures and calibrate participation across residential and commercial classes. Commissioners repeatedly pressed for more detail on what a $1 change in the matrix yields in revenue and asked staff to provide department-by-department and user-type examples (residential, commercial, industrial) and to show a 3–5 year projection. One commissioner quoted figures in discussion: "we are the commission that's being asked at a $14 and $77.07 increase," reflecting concerns about the cumulative impact on customers; staff said the $14 figure represents the average residential increase staff modeled and that more detail will be provided in follow-up materials.
Staff also said regional partners (West Fargo, Grand Forks and other users that buy water from Fargo) will see rate impacts and have been notified of proposed increases. The committee asked staff to return with precise revenue-yield estimates, examples for mixed-use and commercial properties, and a list of project participants so the public can see how costs are shared.
