Impact of the City of Phoenix water rate increase

Photo courtesy of John Hart

Last week, the Phoenix City Council rejected a proposal to increase the municipal water rate. Citing concerns about increasing costs on residents, the council did not approve the 6 percent rate increase. But water policy leaders across the state are sounding the alarm about the statewide impact given the looming Colorado River water shortages.

The City of Phoenix Water Services Department recommended a 6 percent water rate increase in 2019 and a 6 percent increase for 2020 in order to build the infrastructure needed to pump and move alternative water supplies to areas normally served with Colorado River water. According to Phoenix officials the increase would also have funded resources needed to invest in rehabilitation and replacement of the pipes, treatment plants, pumps, reservoirs, and wells that ensure reliable delivery of the city’s drinking water.

“The six percent rate increase over the two years is necessary to support our capital improvement program,” Kathryn Sorenson, Director of Phoenix Water Services, said.

“Our capital improvement program, really there are two main elements to that. One of them is about investing in our future. And that is building the infrastructure necessary to ensure that portions of our distribution system that are currently dependent on our Colorado River water are able to continue to receive reliable water deliveries even as we enter into shortage on the Colorado River.”

State leaders have been negotiating a Drought Contingency Plan should the water levels in Lake Mead drop, which is expected. The City of Phoenix proposal takes this uncertainty into account.

The other issue the failed increase aimed to address was the city’s aging infrastructure. According to Sorenson, Phoenix Water Services has been in operation for 111 years. “We still have pipelines in the ground that are 80, 90, 100 years old,” Sorenson said. “We really need to get ahead of this and replace that infrastructure proactively. Our ability to deliver clean, safe, reliable water supplies is entirely dependent on the state of our infrastructure.”

Had it passed, the rate increase would have meant a monthly increase of approximately $2.00 in 2019 and an additional monthly increase of $2.37 in 2020 for the average residential water customer. 

According to former city councilman Claude Mattox, Chairman of the Phoenix Water/Wastewater Rate Advisory Committee and VP of Government & Community Relations for Molera Alvarez, the rate proposal addresses the key issues outlines by Sorenson.  

“Much of this new revenue is to prevent catastrophic failure of water mains and other critical equipment, as we have experienced numerous times in the last few years,” Mattox said.  “It costs four times more to repair then it does to preventively replace or maintain deteriorated infrastructure.” 

Mattox also explained that the city needs to build redundancy in the system to allow those areas served with Colorado River water, which would be most directly affected by a shortage, to be able to receive water from areas served with Salt and Verde River supplies.

“This rate increase will address these issues and ensure that Phoenix residents and businesses will not experience the draconian drought measures southern California has experienced for years,” Mattox said. “Being proactive positively affects our bond ratings (meaning lower interest payments on debt) and maintains a strong economy for our future. By not supporting the rate increase, the City Council is kicking the can down the road and taking a huge gamble, jeopardizing the bond rating and the economy.”

Sorenson also notes the economic impact of safe and reliable access to water and the importance of water in business attraction efforts.

“When major companies look to relocate here in Phoenix, one of the very first questions they ask is, ‘do you have enough water?,’ Phoenix is held to a higher standard than other cities when it comes to water supplies and we have to ensure that we have 100 percent reliable water supplies to support economic opportunity in the community,” Sorenson said. “Business investment requires certainty. So, we really need to make sure that we are signaling the certainty and the reliability of our water supplies for the future.”