Follow up discussion from the March 25, 2024 City Council - Water Commission Joint Meeting
 

• Move forward with Water Rate Option 3 as presented on March 25, or Option 3 Revised
• Move forward with the staff-recommended option to maintain the current reclaimed water rate policy and revisit the broader plan for reclaimed water management strategies and pricing objectives outside the rate study process

At the request of City Council, Stantec revised Water Rate Option 3 from the March 25, 2024 presentation. The "ratios" between Single-Family Customer Class tiers were adjusted slightly to place more of the cost-of-service due to peaking factors on Tier 3. Adjusting the ratio of cost-of-service on Tier 3 back to 2.00 increased the volume rate for Tier 3 by about $1.00/1,000 gallons and reduced Tier 1 by about $0.10/1,000 gallons. This adjustment still incentivizes indoor and outdoor water conservation in the single-family customer class. The adjustment also supports City Council's objective of increasing the intra-class proportionality of essential water use for our 3, 4, and 5-person households.

Council also requested at the March 25, 2024 meeting to have a larger discussion of Flagstaff's reclaimed water rate policy. Staff provided several attachments to this agenda demonstrating the complexity with pricing and "best-use" approaches industry-wide, within Arizona, and among our citizens. Staff are recommending City Council maintain reclaimed water rates at the current policy (a percentage of potable) and host a broader discussion on reclaimed water with the Water Commission and Council outside the rate study.

See attachments.