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Council hears culinary-water increase plan and discusses nonresidential rate fairness
Summary
Staff reviewed planned residential culinary-water increases included in the FY2027 budget and defended a single-block nonresidential volume charge; Council asked staff to consider a focused cost-of-service review for commercial rates and potential impacts on local businesses.
Staff briefed Council on proposed residential culinary-water rate increases that are reflected in the fiscal-year 2027 budget and on the rationale for maintaining a single-volume-block structure for nonresidential customers.
Finance Director Anna Montoya confirmed the FY2027 budget assumes a 12% culinary-water increase effective July 1 under the current budget plan; Mr. Larson said the residential rate structure would remain unchanged while the proposed increase would support capital projects. During the discussion, Royce Shelley asked why nonresidential per-thousand-gallon charges are lower than residential and why commercial customers were not placed into multiple tiers.
Mr. Larson and staff explained the ombudsman has accepted a single usage block for nonresidential customers because residential increasing-block requirements do not bind commercial rates; staff said the single-block approach reflects earlier cost-of-service work (around 2012) and that a focused review to reassess nonresidential volumes and base rates could be completed at modest cost if Council directs it.
Council asked staff to evaluate consequences for local businesses and whether a higher nonresidential volume charge should be paired with a lower nonresidential base to maintain fairness; staff agreed to return with options and cost estimates for that analysis.
