A tiered system that allows organizations to get a volume discount for buying reclaimed wastewater at off-peak hours could soon be eliminated to help raise money for capital improvements to the city’s reclaimed wastewater distribution system.
At the Flagstaff City Council meeting Tuesday night, city staff proposed a three-year adjustment period to increase prices for reclaimed wastewater in the city. For most customers, costs would increase about 7 percent per year for three years.
The plan also included a three-year phase-out of the tiered rate structure for “off peak” users, which means users that can store the water on their properties and can have water delivered at night. The tiered rate allows customers that buy more than 150 million off-peak gallons to buy subsequent gallons at a cheaper rate. City Water Services Director Brad Hill said only one customer in the city buys enough off-peak reclaimed wastewater to qualify for the second-tier price.
The increased revenue from the rate increases would be used to fund capital improvements to the program, which include six projects, two of which would rely on the increase for funding. The projects total about $5 million. The two that require a rate increase for funding are the replacement of a pipeline bottleneck that would double the supply of water into the reclaimed system from the Wildcat treatment plant and a second storage tank at Buffalo Park, Ryan Roberts, an engineering manager for the Water Services Division, told the council.
The goal of the increases is to eventually bring the reclaimed water rates to 35 percent of the cost of the potable water equivalent, Hill said. In 2002, the rate for reclaimed water was set to be 35 percent of the cost for potable, but in 2010 the council told city staff to decouple the rates, Hill said.
During the public comment period, Ward Davis, a member of the Flagstaff Water Group, called the increase structure “a good compromise” and said the only customer affected by the second tier of off-peak rates, Continental Country Club, might not even reach the threshold of the 150 million gallons three years from now, when the tier is eliminated.
Davis said many reclaimed wastewater customers might spend even less money on reclaimed wastewater in 2020 than they did in 2016 because they will be using less.
John Malin, who also addressed the council during public comment, said there is a benefit to the off-peak users, who are willing to buy water that would be discarded without them. Malin compared off-peak buying to a red-eye flight, and said there are costs associated with having to store water on site that make up for the discount the customers receive.
The rate increase proposed by city staff and approved by the city Water Commission contains a different increase percentage for peak time consumers and off-peak consumers. However, Vice Mayor Jamie Whelan and councilmembers Jim McCarthy, Celia Barotz and Eva Putzova asked that city staff also prepare a rate structure that included an increase that would keep the disparity between peak time users and off-peak users the same, instead of the staff’s plan, which would increase the price disparity.
Mayor Coral Evans said she would like city staff to research what the revenue difference would be if the council kept the disparity in prices for the different customers, and said changing the staff’s plan “might not be worth it” if the amount is “not enough to do a project and it’s going to cause issues.”
A public hearing on the proposed reclaimed wastewater rates will be held during the November 7 city council meeting.