The Payson Water Department wants the council to approve another rate increase to fix leaky pipes and avoid future problems.
A consultant last week urged the council to consider a rate increase that could cost the average homeowner an extra $5 to $9 per month. That’s a 10% to 20% increase, phased in over two years.
A year ago, the council decided against increasing rates because of “pandemic financial uncertainty.” This time, the council seemed willing to reconsider.
Water Department Director Tanner Henry last week again presented options for a rate increase to get ahead of aging equipment and infrastructure.
Part of the problem arises from the years of effort and spending required to complete the C.C. Cragin pipeline project.
“There was a lot of stuff we neglected,” said Henry, as the town pursued the massive effort to bring water up over the Rim and down to Payson. The project more than doubled the town’s long-term water supply, in a state facing a growing water shortage.
Henry has already presented the council with a list of needed capital improvements, including water mains, wells, vehicles, storage tanks, meters, pumps and other equipment.
Dan Jackson, a consultant with Willdan, reported on why the council needs to support a rate increase.
“Due to inflation, the cost of everything goes up even more and the need to replace (while) maintaining your distribution system continues,” he said.
The water department needs to spend about $9.1 million annually to cover operating expenses and debt service, said Jackson. But it has also accumulated $22 million in capital needs.
“We have projected you will be able to fund projects between savings and rates,” said Jackson of the proposed rate increase.
He then presented different options that would either spread out the increase across all users or lean more heavily on high-volume users.
One plan gradually increases the base charge to spread the increase across all rate payers.
“It is ... a more reliable revenue stream,” Jackson told the council.
The other plan would increase fees based on the amount of water used.
“The question you have to ask yourself is, do I want a rate plan that is the same for everybody or a rate plan that gives the lower users a break?” said Jackson.
Currently, Payson’s rates are in line with the region.
“A lot of your neighbors charge at or above what you charge now,” he said.
Henry explained residents will have plenty of chances to weigh in on the proposed rate structure during several public hearings.
After hearing the presentation, the council seemed willing to consider an increase in rates.
“Water is a product like a McDonald’s hamburger and anything else,” said Jackson. “All you are asking from your customers is that you reimburse your costs. You are not seeking a profit. You are just trying to recover your costs.”
Mayor Tom Morrissey said increased rates would “encourage conservation and efficiency.”
Scott Nossek, a local business owner, wrestled with the number of commercial versus residential users.
“Younger people with families tend to use more water,” he said. “Businesses vary tremendously.”
Jim Ferris wondered if there was a benefit to drawing down on savings faster to replace infrastructure faster.
“I’m not sure we have the resources to do that,” said Henry.
Councilor Suzy Tubbs-Avakian worried about people hearing about the June 10 notice of intention hearing.
Jackson suggested Henry and/or Morrissey write commentaries to explain the need for the rate increase.
The council voted unanimously to move forward with the water rate increase discussions.