Oct. 4—The City of Mesa is adjusting its utility rates in the midst of historic inflation, and officials framed the proposed increases as a fair deal compared with the 13% rise in the Valley consumer price index in the past year.
City Council last month initiated the mandatory 60-day notice period required before introducing the ordinance to put the utility rate increases in the books.
Council members advocated for small, incremental increases in utility rates spread over time that would keep customers from seeing big jumps in the future.
A little pain now was better than a lot of pain later, they reasoned, and they seemed satisfied with the figures staff landed on.
For water, the city proposes an effective 3.3% hike for residential customers, 4.8% for commercial and 7.3% for commercial landscape customers.
For gas, the city proposes an effective 2.2% increase for residential customers, and a .8% increase for commercial customers.
Fees for the city's commercial roll off waste bins are set to rise, by $56.50 for the set fee, $3 for the haul fee and a 6.22% increase in the tonnage rate.
Office of Management and Budget Assistant Director Brian Ritschel told Council the city could ultimately settle on lower rate increases without starting over the notification period, but not raise them.
"I'm afraid if we start softening our rates now just with the pressures on capital costs and commodity costs ... that we will have more abrupt rate increases (in the future) when we just want to keep it more predictable in everybody's budget," Vice Mayor Jenn Duff said."
Council member David Luna agreed.
"I would hate to give future councils the charge of increasing our water rates that would be significant and impact our community," he said.
City staff is not recommending raising rates for the roughly 17,000 electricity customers in the city's 5.5-square-mile service area centered around downtown, noting that the city's electric rates are currently higher than Salt River Project rates.
Energy Resources Program Manager Tony Cadorin said the city hopes to lower its electricity costs by investing in electrical generation it can tap during peak demand periods, including a "microgrid" natural gas turbine, 800 kW of solar in downtown Mesa and 2 MW of utility scale solar generated outside the city.
"Every electron that we generate here in Mesa is something that we don't have to buy on the market," Cardorin said.
During the discussion of their recommended rate adjustments, city staff summarized some of the cost pressures they are seeing.
Arizona's reduced allocation of Colorado River water due to extended drought is raising the cost of water for Arizona municipalities, including Mesa.
Because the Central Arizona Project that delivers the water has fixed costs, Mesa Water Director Chris Hassert explained, those costs are spread over fewer gallons of water, prompting CAP to raise rates.
Hassert said the city anticipated paying $3.7 million extra for Colorado River water next year, in addition to increases in the cost of energy and chemicals used to treat the water.
"We're proposing to keep our (water) rates very nominal compared to some cities," Hassert said.
The proposed water rate increase includes an 8 cent per kilogallon "Drought Commodity Charge" separate from the service and usage charge, which is designed to be lifted whenever drought conditions are lifted and the cost CAP water goes down.
Staff acknowledged that could be a long time, but they still wanted to separate out the drought-related cost increases from the other inflationary pressures. For the typical residential customer, the drought surcharge comes out to an extra 24 cents per month.
Council members Kevin Thompson and Mark Freeman hoped the steeper increases on the commercial landscape water rate would provide extra incentive for those customers to conserve water.
Thompson argued for shifting the cost burden from residential utility customers as much as possible.
"During the inflation, people should not have to choose between, 'do we put food on the table or pay our utility bill,'" he said.
City Manager Chris Brady said staff felt the increases were reasonable.
"We think from a perspective of what inflation is today, a little more than 3% increase in water is still a pretty good deal," Brady said.
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