Council Workshop 1.20.26 FINAL.pptx

Council Workshop 
Session:
Utility Rate 
Recommendations
Terry Lowe, WRD Director
Jared Askelson, Deputy City Manager
January 20, 2026

2026 Utility Rate Timeline
Background
•Cost Drivers
•Financial Policies 
•Revenue Requirements
•Recommendations
•Rate Design
•Comparisons

2026 Utility Rate 
Timeline

Timeline
• Citizen Water & Wastewater Rates Committee 
(WRC)
• July - September: Bi-Weekly Meetings
oPublic Outreach Approach 
oDeep Dives into each Utility’s Operations & Asset 
Demands
oUtility Rate Structure Analysis
oComparisons to other Utility Providers
oUtility Rate and Enterprise Fund Analysis 
oRecommendations 
• Oct. 9th : Voted on Recommended Rate Cycle, 
Structure, Fees

Timeline cont.
• October
• Media campaign
• EOB, social media, informational flyers
• November
• Community Outreach Meetings Held
• Rate Discussion Videos Released
• December 
• Meetings with HOAs

Timeline cont.
• January 20th:  Tonight’s work 
session
• February 3rd:  Council to issue 
Notice of Intent
• April 7th: Council to Adopt Rates
• May 13th: New Rates Go Live

Background

Background

Background
Assets for Similar 
Customer Base
Surprise
Liberty
Goodyear
Buckeye
Gallons Produced 
(billions)
3.43
4.93
3.55
4.10
Wells
21
16
14
33
Well Inspection Hours 
(with no issues)
6
8
6
18
Production & Treatment 
FTEs
7
8
13
19
Reservoirs
14
2
9
24
Booster Pumps
57
12
39
87
Pressure Reducing 
Valves
9
4
4
24
Generators
19
11
13
48
Square Miles (not 
contiguous)
26
20
44
87.8
What makes Buckeye Different ?

Utility Cost Drivers
• Increasing costs—rates last adjusted 
January 2020
• Operations
• Capital
• Water portfolio—model includes $33.7M
• Asset management

$360,000,000
 $370,000,000
 $380,000,000
 $390,000,000
 $400,000,000
 $410,000,000
 $420,000,000
 $430,000,000
 $440,000,000
 $450,000,000
 $460,000,000
FY16-26 Wastewater Asset Value
Asset Management
 $400,000,000
 $450,000,000
 $500,000,000
 $550,000,000
 $600,000,000
 $650,000,000
 $700,000,000
 $750,000,000
FY16-26 Water Asset Value

Asset Management
• Industry standard
• Repair budget equals 2% of replacement 
asset value
Utility
FY2026 Operating 
Budget
% of RAV
Water
$        5,616,300 
0.71%*
Wastewater
538,500 
0.12%*
*Water 0.97%, Wastewater 0.56% including Capital Improvements Plan projec
Model targets 1% of RAV by FY2029 (Yea

Asset Management
 $-
 $1
 $2
 $3
 $4
 $5
 $6
 $7
 $8
 $9
 $10
2026
2027
2028
2029
FY26-29 Water Repair Budget to 
Target
Target
Repair Budget
 $-
 $1
 $2
 $3
 $4
 $5
 $6
 $7
2026
2027
2028
2029
FY26-29 Wastewater Repair Budget 
to Target
Target
Repair Budget

Financial Policies
• Rate study completed every five years
• Rate adjustments based on a five-year model
• Fees should cover operating costs
• Reserve 17% of operating revenue
• Debt coverage ratio minimum of 1.2x

Fees Cover Operating Costs
 $-
 $0.5
 $1.0
 $1.5
 $2.0
 $2.5
 $3.0
2026
2027
2028
2029
2030
Millions
FY26-30 Water Operating 
Surplus/(Deficit)
 $-
 $0.5
 $1.0
 $1.5
 $2.0
 $2.5
 $3.0
2026
2027
2028
2029
2030
Millions
FY26-30 Wastewater Operating 
Surplus/(Deficit)

Reserve 17% of Operating Revenues
 $-
 $5
 $10
 $15
 $20
 $25
 $30
 $35
2026
2027
2028
2029
2030
Millions
FY26-30 Water Fund Balance
Ending Fund Balance
Reserve Requirement
 $-
 $5
 $10
 $15
 $20
 $25
2026
2027
2028
2029
2030
Millions
FY26-30 Wastewater Fund Balance
Ending Fund Balance
Reserve Requirement

Debt Service Coverage Ratio
 1.10
 1.15
 1.20
 1.25
 1.30
 1.35
 1.40
2026
2027
2028
2029
2030
FY26-30 Water Debt Coverage 
Ratio
Debt Coverage Ratio
Minimum Ratio
 1.10
 1.30
 1.50
 1.70
 1.90
 2.10
 2.30
 2.50
2026
2027
2028
2029
2030
FY26-30 Wastewater Debt 
Coverage Ratio
Debt Coverage Ratio
Minimum Ratio

Global Connection Fees
• $3,000 payment for each 
connection
• Anticipated to pass through 
cost
• Paid from Water utility
• Model includes
• $3M annual expense
• $80K annual revenue
 $-
 $0.5
 $1.0
 $1.5
 $2.0
 $2.5
 $3.0
 $3.5
Millions
FY16-25 Global Extension Fee 
Payments

Revenue Requirements
•Water
• Annual rate revenue increase of 4.25%
•Wastewater
• Annual rate revenue increase of 7.00%

Recommendations

Recommendations
• Gradualism
• Rate changes will be steady and 
incremental
• Four-year rate plan
• WRC had recommended five-year plan
• New rate structure
• Incentivize conservation
• Fairness to customers

Recommendations
81%
19%
Wastewater Usage
Residential
Commercial
90%
10%
Wastewater Revenue
Residential
Commercial

New Rate Structure
Base Rate 
Structure for all 
Customers:
•
3/4” meter
•
1” meter
•
1.5” meter
•
2” meter
•
3” meter
•
4” meter
•
6” meter
•
8” meter
•
10” meter
Residential Usage Rate 
Structure:
•
0 – 6,000 gallons
•
6,001 – 10,000 gallons
•
10,001 – 20,000 gallons
•
20,001 – 30,000 gallons
•
30,001+ gallons
Potable Landscape Usage 
Rate Structure:
•
0 – 50,000 gallons
•
50,001+ gallons
Commercial Usage Rate 
Structure:
•
0 – 10,000 gallons
•
10,001 – 30,000 gallons
•
30,001 – 50,000 gallons
•
50,001+ gallons
Non-Potable Landscape 
Usage Rate Structure:
•
Per 1,000 gallons
W
A
T
E
R

New Rate Structure
Base Rate Structure 
for all Customers:
•
≤1” meter
•
1.5” meter
•
2” meter
•
3” meter
•
4” meter
•
6” meter
•
8” meter
•
10” meter
Residential Usage 
Rate Structure:
•
None
Commercial Usage Rate 
Structure:
•
Per Thousand Gallons
W
a
s
t
e
w
a
t
e
r

Water Base Rate Recommendation
*Current rates include $3.05 Replacement Fee for Residential, Comm/Multi, and Potable Landscape
Current 
Residentia
l*
Current 
Commercial
/Multi-
Family*
Current 
Potable 
Landscape*
Current 
Non-
Potable 
Landscape
Meter 
Size
Proposed Rates - All Customers
2026
2027
2028
2029
$35.99 
$37.40 
$29.65 
$22.17 
3/4”
$30.02 
$31.30 
$32.63 
$34.01 
$35.99 
$111.04 
$86.61 
$60.06 
1”
$33.36 
$34.77 
$36.25 
$37.79 
$35.99 
$111.04 
$86.61 
$60.06 
1.5”
$66.51 
$69.34 
$72.29 
$75.36 
$35.99 
$290.85 
$225.92 
$160.19 
2”
$106.46 
$110.98 
$115.70 
$120.62 
$35.99 
$290.85 
$225.92 
$160.19 
3”
$213.12 
$222.18 
$231.62 
$241.46 
$35.99 
$542.68 
$420.94 
$300.36 
4”
$332.96 
$347.11 
$361.87 
$377.25 
$35.99 
$902.43 
$699.53 
$500.59 
6”
$665.73 
$694.02 
$723.52 
$754.26 
$35.99 
$1,801.80 $1,396.00 $1,001.18 
8”
$1,065.20 $1,110.47 $1,157.67 $1,206.87 
$35.99 
$1,801.80 $1,396.00 $1,001.18 
10”
$1,531.39 $1,596.47 $1,664.32 $1,735.06

Water Usage Rate Recommendation
* percentage of bills
**prior structure
Residential Usage 
Rate 
Current
2026
2027
2028
2029
Commercial Usage 
Rate 
Current
2026
2027
2028
2029
(per month)
(per 
kgal)
(per month)
(per 
kgal)
0 – 6k (98.5%)*
$3.93 $4.77 $4.97 $5.18 $5.40 
0 – 10k (50%)*
$8.08 $11.25 $11.73 $12.23 $12.75 
6,001– 10k (.6%)*
$4.91 $5.96 $6.22 $6.48 $6.76 
10,001 – 30k 
(20%)*
$8.08 $12.66 $13.19 $13.75 $14.34 
10,001 – 20k 
(.84%*)
$6.14 $7.45 $7.77 $8.10 $8.44 30,001 - 50k (8%)*
$8.08 $14.24 $14.84 $15.47 $16.13 
20,001 -30k 
(.03%)*
$7.68 $9.69 $10.10 $10.53 $10.98 
50,001+ (23%)*
$8.08 $16.02 $16.70 $17.41 $18.15 
30,001+ (.04%)*
$9.59 $12.60 $13.13 $13.69 $14.27 
Potable Landscape 
Usage Rate 
Current
(per 
kgal)
2026
2027
2028
2029
Non-Potable 
Landscape Usage 
Rate 
Current
2026
2027
2028
2029
0 – 50k (75%)*
$6.61** $7.02 $7.32 $7.63 $7.96 
Per Thousand 
Gallons
$3.30 $4.77 $4.97 $5.18 $5.40 
50,001+ (25%)*
$7.93** $8.78 $9.15 $9.54 $9.94

Wastewater Base & Usage Rate 
Recommendations
Residential Base Rate
Current
2026
2027
2028
2029
(per Meter Size)
≤1” (99.95%)
$28.86 
$39.44 
$42.20 
$45.15 
$48.31 
Res. Usage Rate 
(per thousand gallons)
$2.00 
0
0
0
0
Commercial Base Rate
Current
2026
2027
2028
2029
(per Meter Size)
¾”
$19.12 
$43.50 
$46.55 
$49.80 
$53.29 
1” (37%)
$60.06 
$72.65 
$77.73 
$83.17 
$88.99 
1.5” (11%)
$60.06 
$144.86 
$154.99 
$165.84 
$177.45 
2” (48%)
$160.19 
$231.86 
$248.08 
$265.45 
$284.03 
3” (1.5%)
$160.19 
$464.15 
$496.64 
$531.40 
$568.60 
4” (1.68%)
$300.36 
$725.15 
$775.91 
$830.22 
$888.33 
6” (.55%)
$500.59 
$1,449.86 
$1,551.34 
$1,659.94 
$1,776.13 
Comm. Usage Rate 
(per thousand gallons)
$2.51 
$5.00 
$5.35 
$5.72 
$6.13

Water Monthly Impact
Category
Assumptions
Current
*Includes 
$3.05 R&R
2026
% Change 
Current to 
2026
2027
2028
2029
Residentia
l
1” Meter, 
6K/month usage
$59.57 
$61.98 
4.0%
$64.61 
$67.36 
$70.22 
Commercial
1” Meter, 
15K/month usage
$232.24 
$209.16 
-9.9%
$218.06 
$227.32 
$236.95 
Commercial
2” Meter, 
20K/month usage
$452.45 
$345.56 
-23.6%
$360.27 
$375.57 
$391.48 
Landscape
2” Meter, 
20K/month usage
$358.12 
$246.89 
-31.1%
$257.38 
$268.32 
$279.73 
Landscape
2" Meter, 500K/month 
usage
$4,124.92 $4,407.14 
6.8%
$4,594.44 $4,789.71 $4,993.27 
Non-
Potable
2” Meter, 
150K/month usage
$655.19 
$821.96 
25.5%
$856.89 
$893.31 
$931.28 
Commercial
2” Meter, 
800K/month usage
$6,754.85 
$12,771.9
6 
89.1%
$13,314.2
7 
$13,880.2
7 
$14,470.1
8

Wastewater Monthly Impact
*Assumes: Base + Usage Rate of 4 kgal
usage 
Category
Assumptions
Current
2026
% Change 
Current to 
2026
2027
2028
2029
Residential*
1” Meter, any 
usage
$36.86 
$39.44 
7.0%
$42.20 
$45.15 
$48.31 
Commercial
1” Meter, 
15K/month usage
$97.71 
$147.65 
51.1%
$157.98 
$169.04 
$180.87 
Commercial
2" Meter, 
20K/month usage
$210.39 
$331.86 
57.7%
$355.08 
$379.94 
$406.54 
Commercial
2” Meter, 
800K/month 
usage
$2,168.19 $4,231.86 
95.2% $4,528.08 $4,845.05 $5,184.20

Recommended Rate Comparisons
* Liberty Application with ACC filed 6/30/2025
$0
$20
$40
$60
$80
$100
$120
$140
Avondale
Peoria
Surprise Glendale
Buckeye
(Curr.)
Buckeye
(Rec.)
Liberty*
EPCOR
Goodyear
Monthly Residential Total (1” Meter, 6K Water, 4K 
Wastewater)
Water
Wastewater

Recommended Rate Comparisons
Residential Bill Totals
Category
Current
Recommended
1" Meter, 6K Water, 4K Wastewater
Water Base
$32.94 
$33.36 
Water Consumption
$23.58 
$28.62 
Sewer Base
$28.86 
$39.44 
Sewer Consumption
$8.00 
$0.00 
Garbage and Recycling
$25.53 
$25.53 
Environmental Fee
$5.00 
$5.00 
Repair & Replacement Fee
$3.05 
$0.00 
Sales Tax
$6.01 
$7.64 
AZ Water Quality Tax
$0.04 
$0.04 
Bill Total
$133.01 
$139.63 
Dollar Amount Increase
$6.62 
Percentage Increase
5.0%

Recommended Rate Comparisons
Commercial Bill Totals
Category
Current
Recommended
1" Meter, 15K Usage
Water Base
$107.99 
$33.36 
Water Consumption
$121.20 
$175.80 
Sewer Base
$60.06 
$72.65 
Sewer Consumption
$37.65 
$75.00 
Environmental Fee
$5.00 
$5.00 
Repair & Replacement Fee
$3.05 
$0.00 
Sales Tax
$22.06 
$19.92 
AZ Water Quality Tax
$0.10 
$0.10 
Bill Total
$357.11 
$381.82 
Dollar Amount Increase
$24.71 
Percentage Increase
6.9%

Recommended Rate Comparisons
Commercial Bill Totals
Category
Current
Recommended
2" Meter, 20K Usage
Water Base
$287.80 
$106.46 
Water Consumption
$161.60 
$239.10 
Sewer Base
$160.19 
$231.86 
Sewer Consumption
$50.20 
$100.00 
Environmental Fee
$5.00 
$5.00 
Repair & Replacement Fee
$3.05 
$0.00 
Sales Tax
$42.54 
$32.60 
AZ Water Quality Tax
$0.13 
$0.13 
Bill Total
$710.51 
$715.15 
Dollar Amount Increase
$4.64 
Percentage Increase
0.7%

Recommended Rate Comparisons
Commercial Bill Totals
Category
Current
Recommended
2" Meter, 800K Usage
Water Base
$287.80 
$106.46 
Water Consumption
$6,464.00 
$12,665.50 
Sewer Base
$160.19 
$231.86 
Sewer Consumption
$2,008.00 
$4,000.00 
Environmental Fee
$5.00 
$5.00 
Repair & Replacement Fee
$3.05 
$0.00 
Sales Tax
$628.67 
$1,188.26 
AZ Water Quality Tax
$5.20 
$5.20 
Bill Total
$9,561.91 
$18,202.28 
Dollar Amount Increase
$8,640.37 
Percentage Increase
90.4%

Next Steps
• February 3rd:  Council action on 
Notice of Intent
• April 7th: Council to Adopt Rates
• May 13th: New Rates Go Live
• Future rate increase on 1/1/27, 1/1/28, and 
1/1/29

Citizen Water & 
Wastewater Rates 
Committee

Discussion  & 
Questions