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11.A.

City Council Meeting - FINAL

Meeting Date:

04/02/2024

Co-Submitter:

Shannon Jones

From:

Erin Young, Water Resources Manager

TITLE

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

STAFF RECOMMENDED ACTION:

Staff is requesting City Council direction on two topics:

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

Executive Summary:

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.

Information:

See attachments.

Attachments

Water Reuse Cost Allocations and Pricing Survey

Flagstaff Reclaimed Water Pricing Policy and Economic Value of Water Memo

Flagstaff Reclaimed Water Study

Presentation