Committee Report

Audit, Finance and Enterprise Committee Report 
 
Date: 
September 3, 2026 
To: 
Audit, Finance and Enterprise Committee 
Through: 
Marc Heirshberg, Assistant City Manager 
Michael Kennington, Deputy City Manager/Chief Financial Officer 
From: 
Brian A. Ritschel, Management and Budget Director 
Joe Giudice, Water Resources Director 
 
Scott Bouchie, Energy Resources Director 
Sheri Collins, Solid Waste Director  
Subject:        Fiscal Year 2026/2027 Utility Rates Recommendation 
 
PURPOSE AND RECOMMENDATION 
The purpose of this report is to provide staff recommendations for utility rate adjustments. 
The rate adjustments are recommended to be effective January 1, 2027. 
 
For each utility, the forecasted expenses (uses) are compared to the forecasted revenues 
(sources). The table below shows the projected net sources and uses for FY 2026/27 and 
FY 2027/28 if the recommended utility rate adjustments are adopted. The FY 2026/27 and 
FY 2027/28 net sources and uses are projected to be negative, however the net sources 
and uses for the Utility Fund improves throughout the forecast period (see Attachment 2 
for more detail). 
 
Utility 
FY 26/27 
FY 27/28 
Water 
  ($2,809,000) 
  $4,954,000 
Wastewater 
  ($5,669,000) 
  ($4,067,000) 
Solid Waste 
      $210,000 
  $2,358,000 
Electric 
      ($614,000) 
     ($968,000) 
Natural Gas  
   ($2,996,000) 
  ($3,288,000) 
Total 
($11,933,000) 
  ($1,011,000) 
 
The method of implementation of rate adjustments can vary from year to year based on the 
needs and goals of the individual utilities. The impact on individual customers can vary 
based on the method of implementation and customer consumption.

FY 2026/2027 Utility Rates Recommendation 
Page 2 
 
 
 
For FY 2026/27, the following rate adjustments are recommended (see Attachment 1 for 
more detail): 
 
Solid Waste: 
Residential barrel rates: 5.5% increase to monthly service charge 
Front-load rates: Overall 6.0% increase 
Commercial Roll-Off rates: Overall 6.0% increase 
 
Electric: 
Residential: $2.00 per month service charge increase 
Residential: 3.0% Summer Tier 1 usage charge increase 
Residential: 4.0% Summer Tier 2 usage charge increase 
Residential: 6.0% Winter Tier 1 & 2 usage charge increase 
Non-Residential: $5.00 per month service charge increase 
Non-Residential: 3.0% Summer and Winter Tier 1 usage charge increase 
Non-Residential: 6.0% Summer Tier 2 usage charge increase 
Non-Residential: 5.0% Winter Tier 2 usage charge increase 
Interdepartmental: 6.3% Tier 2 usage charge increase 
Gas: 
Residential: $1.50 per month service charge increase 
Residential: 4.5% Summer and Winter Tier 1 usage charge increase 
Residential: 6.0% Summer and Winter Tier 2 usage charge increase 
Non-residential: $3.00 per month service charge increase 
Non-residential: 3.0% Summer and Winter Tier 1 usage charge increase 
Non-residential: 5.0% Summer and Winter Tier 2 usage charge increase 
 
Water: 
All customers: 4.0% increase to monthly service charge 
Residential Tiers 1 & 2: 3.5% usage charge increase 
Residential Tiers 3 & 4: 4.5% usage charge increase 
General Commercial and other non-residential: 13.0% usage charge increase 
Non-residential Landscape: 15.0% usage charge increase 
Large Commercial and Industrial: 23.0% usage charge increase 
Multi-Unit: 12.0% usage charge increase 
Non-residential General Excess Surcharge Tier 1: 13.0% usage charge increase 
Non-residential General Excess Surcharge Tier 2: 23.0% usage charge increase 
Non-residential Landscape Excess Surcharge Tier 1: 15.0% usage charge increase 
Non-residential Landscape Excess Surcharge Tier 2: 25.0% usage charge increase 
Pumping Surcharge: 3.5% usage charge increase 
Mesa Gateway Airport Fire Protection: 30.0% demand charge increase 
Interdepartmental: 3.5% usage charge increase 
 
 
Wastewater: 
Residential rate: 7.5% service and usage components increase 
Non-residential: 8.5% service and usage components increase

FY 2026/2027 Utility Rates Recommendation 
Page 3 
 
 
 
BACKGROUND AND DISCUSSION 
 
Each utility is operated as a separate business center. As such, rate schedules are 
adjusted annually in a manner consistent with costs of capital, as well as the fixed and 
variable costs of operation and maintenance. In addition, rates are reviewed and updated 
with the requirements of Title 3, Chapter 3 of the Mesa City Code. To develop rate 
recommendations, staff consider the following five Financial Principles to ensure the 
reliability, sustainability, and affordability of the utilities: 
 
• Balance net sources and uses 
• 20% or higher reserve fund balance 
• Rate adjustments that are predictable and smoothed throughout the forecast 
• Equity between residential and non-residential rates 
• Affordable utility services 
 
In alignment with the City Code and the Financial Principles, the reserve balances are 
combined in the Utility Fund and are managed to maintain a targeted ending reserve 
balance of 20% or higher of the following year’s estimated expenditures. The reserve 
balance allows for the smoothing of rate adjustments. This smoothing avoids large rate 
increases and minimizes the impact to customers in any single year.  
 
The Utility Fund Cash Flow Projections (Attachment 2) includes projections of growth. 
The Water, Wastewater, and Solid Waste utilities have a citywide service area and are 
expected to grow by an average of about 0.9% per year during the forecast. With the 
inclusion of the Magma service area, the Natural Gas utility accounts are expected to 
grow by 2.2% in FY 2026/27. The Electric utility, with a smaller and largely built out 
service area when compared to the other utilities, is not expected to grow significantly in 
FY 2026/27.  
 
The Utility Fund Cash Flow Projections also include expenditures that are increased by 
inflationary factors in future years. Some inflationary factors are unique to the individual 
utilities, such as those used for chemicals or purchased water. Other citywide expenditure 
pressures that are included in the forecast are listed below. 
 
Capital Investment 
 
The City continues to place a high priority on infrastructure investment to attract and 
service future development. The FY 2026/27 Capital Improvement Program (CIP) 
includes the planning for increased customer demand, maintaining system reliability, 
and satisfying contractual commitments. The debt service on utility systems revenue 
bonds and obligations is funded through the utility rates paid by customers. The City 
issues obligations on an as-needed basis in order to minimize the interest cost. 
Anticipated future debt service has been included in the forecast and rate 
recommendations.

FY 2026/2027 Utility Rates Recommendation 
Page 4 
 
 
 
Review of the General Fund Contribution 
The Utility Fund contribution to the General Fund is calculated based off 30% of each 
utility’s gross operating revenues. The amount of the transfer throughout the forecast 
period is adjusted based on the gross operating revenue forecast. The adjustment for 
FY 2026/27 is projected to be an increase of $11.0 million, increasing from $147.0 
million to $158.0 million. However, depending on actual gross revenues received, the 
amount transferred could be lower or higher than what is projected. 
 
 
SOLID WASTE UTILITY 
 
Solid Waste services are charged as fixed monthly rates for the various services provided. 
 
The Solid Waste utility forecast includes increased costs related to fleet maintenance, 
material processing, and disposal charges. Material processing and disposal costs are 
increasing regionally and are projected to increase by $2.3M in total from FY 2025/26 to 
FY 2026/27. Fleet maintenance costs are also projected to increase by $1.8M from FY 
2025/26 to FY 2026/27 due to increased labor and parts costs as well as increased 
maintenance for the aging of the fleet.  
 
Residential Rates 
 
Staff are recommending a 5.5% increase to all residential barrel rates. Staff are 
recommending a $4.00 per load increase to scheduled bulk item pick-up requests and 
$4.00 per load increase for appliance collection. Additionally, staff is recommending a 
$0.05 increase for the Mesa Green and Clean Fee. The standard black barrel refuse 
service includes a blue barrel recycling service.   
 
90-gallon barrel service: Increase of $1.92 per month, from $34.99 to $36.91 
60-gallon barrel service: Increase of $1.72 per month, from $31.23 to $32.95 
35-gallon barrel service: Increase of $1.62 per month, from $29.42 to $31.04 
Additional trash barrel: Increase of $0.91, from $16.52 to $17.43 
 
Green barrel: Increase of $0.45, from $8.27 to $8.72 
 
Bulk Pick Up: Increase of $4.00 per load, from $31.00 to $35.00 
 
Appliance Recycling: Increase of $4.00 per load, from $19.00 to $23.00 
 
Green and Clean Fee: Increase of $0.05 from $1.00 to $1.05 
 
The projected annualized revenue increase is $3,671,000. 
 
Commercial Front-Load Trash 
The Front-Load program serves customers in competition with private waste collection 
companies. There are various rate factors related to Front-Load service.  
 
Staff are recommending increasing the base rate, out-of-zone fee, and multi-bin 
discounts. The projected overall increase for Front-Load Trash is 6.0%.

FY 2026/2027 Utility Rates Recommendation 
Page 5 
 
 
 
 
Base rate for Trash: 
Increase 2-yard from $93.00 to $99.50 
Increase 3-yard from $101.00 to $108.50 
Increase 4-yard from $109.00 to $117.50 
Increase 6-yard from $127.48 to $138.50 
Increase 8-yard from $145.70 to $158.80 
Increase out-of-zone fee by $2.00, from $33.00 to $35.00 
Increase multi-bin discount by 4% for 2- to 6-yard bins and by 3% for 8-yard bins 
 
Commercial Front-Load Recycling 
 
Staff are recommending increasing the base rate. 
 
 
Base rate for recycling: 
Increase 2-yard from $78.62 to $85.69 
Increase 3-yard from $85.44 to $93.12 
Increase 4-yard from $92.28 to $100.58 
Increase 6-yard from $107.87 to $117.57 
Increase 8-yard from $127.18 to $138.61 
 
Commercial Front-Load Compactor 
 
Staff are recommending increasing the base rate. 
 
Base rate for compactors: 
Increase 2-yard from $131.88 to $143.73 
Increase 3-yard from $156.14 to $170.18 
Increase 4-yard from $180.41 to $196.62 
Increase 5-yard from $198.34 to $216.18 
Increase 6-yard from $214.99 to $234.32 
 
The projected increase in annualized revenue is expected to be $625,000 for Front-Load 
Trash, Recycle, and Compactor services. 
 
 
Commercial Roll-Off 
 
The Roll-Off program serves residents and business customers in competition with 
private waste collection companies. 
 
Staff are recommending the following Roll-Off rate adjustments:  
Increase trash and green haul fees as follows: 
 
Base rates for Roll-Off Trash: 
Increase 15-yard/20-yard from $140.00 to $145.00 
Increase 30-yard from $150.00 to $161.00

FY 2026/2027 Utility Rates Recommendation 
Page 6 
 
 
 
Increase 40-yard from $166.00 to $178.00 
 
Base rates for Green Waste: 
Increase 15-yard/20-yard from $140.00 to $145.00 
Increase 30-yard from $150.00 to $161.00 
Increase 40-yard from $166.00 to $178.00 
 
Increase trash per ton charge by $3.50 from $51.50 to $55.00 
Increase green waste per ton charge by $3.50 from $59.82 to $63.32 
 
Increase fee for weight above the limit trash per ton charge by $5.09 from $54.91 
to $60.00. 
Increase fee for weight above the limit green waste per ton charge by $5.09 from 
$63.85 to $68.94 
 
The projected roll-off increase in annualized revenue is approximately $134,000 for Roll-
Off containers. 
 
The projected annualized increase in revenue for all Solid Waste utility recommendations 
is approximately $4,430,000. 
 
 
ELECTRIC UTILITY 
 
Rates for electric service are comprised of three major components: System Service 
Charge with a flat monthly rate, Energy Usage Charge based on units of consumption, 
and the Electric Energy Cost Adjustment Factor (EECAF) which passes the cost of the 
purchase of the electric commodity to the customer.  
 
Adjustments to the system service charge component of the electric rate allow for a more 
stable revenue source for the program and insulates customers from higher energy costs 
during peak demand periods such as the summer. Currently, approximately 22% of the 
revenues (excluding EECAF) from electric customers are fixed revenues. The program is 
heavily reliant on consumption to cover fixed expenses. Rate adjustments applied to the 
system service charge allow for a movement toward a more balanced rate structure. 
Average customer bills for the City of Mesa are similar to Salt River Project but are below 
Arizona Public Service. 
 
Additionally, the electric program is experiencing inflationary pressures on operating 
costs, as well as increased debt service expenses related to system infrastructure 
improvements. 
 
The EECAF component is adjusted monthly to “pass-through” increases and decreases 
in the costs of electric energy supplies acquired to meet customers’ needs. The electric 
energy market experiences price fluctuations due to availability of energy reserves, 
population growth in the Western Market, and weather conditions. The impact of these

FY 2026/2027 Utility Rates Recommendation 
Page 7 
 
 
 
factors resulted in increased costs for electricity until more favorable contract pricing was 
realized for FY 2025/26. Electricity costs were $28.6M in FY 2023/24, $31.1M in FY 
2024/25, $23.6M in FY 2025/26 and are projected to be $23.1M in FY 2026/27. Staff 
continue to actively monitor pricing for electricity and apply the increasing costs using a 
smoothing approach in order to manage spikes in customer bills.  
 
Residential 
 
Staff recommend the following rate adjustments: 
 
 
System Service Charge: increase of $2.00 per month, from $20.50 to $22.50 
 
Usage Charges:  
3.0% increase in Summer Tier 1 usage charge 
 
 
 
 
4.0% increase in Summer Tier 2 usage charge 
 
 
 
 
6.0% increase in Winter Tier 1 usage charge 
 
 
 
 
6.0% increase in Winter Tier 2 usage charge 
 
Average residential bill with customer charge, energy usage charge, and EECAF: from 
$123.10 to $126.76, a 3.0% increase, or $3.66 per month 
 
Average residential customer bills for the City of Mesa are between estimated Salt River 
Project bills ($120.75 multifamily & $130.75 single-family) and comparable to estimated 
Arizona Public Service bills ($154.92). 
 
Non-Residential 
 
Staff recommend the following rate adjustments: 
 
 
Service Charge: increase of $5.00 per month, from $24.72 to $29.72 
Usage Charge: 3.0% increase for Summer/Winter Tier 1 and a 5.0% increase for 
Winter Tier 2 and a 6.0% increase for Summer Tier 2 
 
Average commercial bill with customer charge, energy usage charge, and EECAF: from 
$478.36 to $490.10, a 2.5% increase, or $11.74 per month 
 
 
Interdepartmental Electric 
 
Staff recommend a 6.3% increase for the Interdepartmental Tier 2 usage charge. The 
Interdepartmental rates increased 4.5% in 2026 and 2025, and 3.5% in 2024. Prior to that 
they had not been adjusted since 2016. 
 
The projected annualized increase in revenue for the Electric utility recommendations is 
approximately $1,120,000.

FY 2026/2027 Utility Rates Recommendation 
Page 8 
 
 
 
NATURAL GAS UTILITY 
 
Rates for natural gas service are comprised of three components: System Service Charge 
with a flat monthly rate, Usage Charge based on units of consumption, and the Purchased 
Natural Gas Cost Adjustment Factor (PNGCAF) which passes the cost of the purchase 
of the natural gas commodity to the customer. Those customers that reside in the Magma 
service area also have a Magma adjustment factor rate component. The adjustment 
factor benchmarks the City’s rates to the rates of Southwest Gas to provide market equity. 
 
Additionally, the natural gas program is experiencing inflationary pressures on operating 
costs, as well as increased debt service expenses related to system infrastructure 
expansion and improvements. 
 
The recommended residential system service charge adjustment is an increase of $1.50 
per month, and the non-residential system service charge recommendation is for a $3.00 
per month increase. The customer bill increase will vary largely based on consumption. 
The higher the consumption, the lower the percentage impact would be. The residential 
Tier 2 Summer/Winter Usage increase would increase rates over 25 therms of usage and 
will continue the City’s efforts to create a progressive rate structure for usage.     
 
The PNGCAF component has been adjusted monthly to “pass-through” increases and 
decreases in the costs of natural gas supplies acquired to meet customers’ needs.  
Staff recommend the following rate adjustments: 
Residential  
 
Service Charge – summer and winter: increase of $1.50 
Usage Charge – Tier 1 – under 25 therms: 4.5% increase for summer and winter 
Usage Charge – Tier 2 – over 25 therms: 6.0% increase for summer and winter 
 
Average monthly Mesa resident bill with customer charge, usage charge, and PNGCAF: 
from $42.28 to $44.63, a 5.6% increase, or $2.35 per month 
 
Non-Residential  
 
Service Charge - summer: increase of $3.00, from $47.66 to $50.66 
Service Charge - winter: increase of $3.00, from $57.34 to $60.34 
Non-Residential Usage Charge – Tier 1: 3.0% increase for summer and winter 
Non-Residential Usage Charge – Tier 2: 5.0% increase for summer and winter 
 
Average monthly Mesa commercial bill with customer charge, usage charge, and 
PNGCAF: from $475.84 to $487.68, a 2.5% increase, or $11.84 per month 
 
The projected annualized increase in revenue for the Natural Gas utility recommendations 
is approximately $2,860,000.

FY 2026/2027 Utility Rates Recommendation 
Page 9 
 
 
 
WATER UTILITY 
Rates for water service are comprised of two components: Service Charge, with a flat 
monthly rate based on the water meter size and Usage Charge, based on units of water 
consumption. 
 
The water utility forecast includes costs for debt service; joint venture costs for the 
operation of the Val Vista Water Treatment Facility; and power, commodity, and 
chemicals at the City’s water treatment plants. Staff reviews and forecasts all costs each 
year to ensure rates are sufficient to keep up with expenses. This includes projected 
increases of approximately $13.6M in operating costs and $5.1M debt service costs from 
FY 2025/26 to FY 2026/27. The difference in operating costs from FY 2025/26 to FY 
2026/27 is largely due to (1) funding the first year of operations for the expanded Signal 
Butte Water Treatment Plant, and (2) the Water Department realizing savings in FY 
2025/26. 
 
Over the last few years, the City has concentrated on aligning its fixed revenues with fixed 
costs, while at the same time trying to keep costs low for its low usage customers (≤3,000 
gallons per month). Fixed revenues are derived from the Service Charge of the 
customer’s water bill, which includes 3,000 gallons of water per month. The City’s goal is 
for 35%-40% of its overall water revenue to come from the Service Charge. FY 2025/26 
fell below this goal at 33% of total rate revenues due to higher than anticipated water 
consumption because of relatively dry and warm weather throughout the fiscal year. 
 
The variable rate component (Usage Charge) is based on water consumption rounded to 
1,000-gallon increments. There are four residential tiers (or levels of usage). Each tier 
has a different rate. The tier structure allows for a demand-based rate as customers with 
higher usage patterns create a greater demand for infrastructure and service capacity. 
 
Residential Water 
 
Staff recommend a 4.0% increase to all service charges and a Drought Commodity 
Charge of $0.13 (an increase of $0.05) per 1,000 gallons of water consumption above 
3,000 gallons per billing period during a declared water shortage. Staff also recommend 
the following Residential usage charge increases: 
 
     Tier 1 (4,000 – 6,000 gallons): 3.5% increase, from $3.81 to $3.94 per 1,000 gallons 
     Tier 2 (7,000 – 14,000 gallons): 3.5% increase, from $5.81 to $6.01 per 1,000 gallons 
     Tier 3 (15,000 – 24,000 gallons): 4.5% increase, from $7.11 to $7.43 per 1,000 gallons 
     Tier 4 (>24,000 gallons): 4.5% increase, from $8.03 to $8.39 per 1,000 gallons

FY 2026/2027 Utility Rates Recommendation 
Page 10 
 
 
 
Typical Residential Water Consumer Impact: 
 
Service Charge: $1.32 increase per month, from $32.97 to $34.29 
Usage Charges: $0.39 per month, from $11.43 to $11.82 
Drought Commodity Charge: $0.13 per month, from $0.24 to $0.39 
 
Typical monthly bill impact: $1.86 per month, from $44.64 to $46.50 
 
Arizona Water Company comparison: 
Service Charge: $47.04 per month 
Usage Charges (6,000 gallons): $16.51 
CAP Water Surcharge: $0.41 
Regulatory Expense Surcharge: $0.28 
System Improvement Benefits Surcharge: $1.78 
 
Typical monthly bill: $66.02 per month 
 
Non-Residential Water 
 
Consistent with the direction promoting equity with residential rates and furthering 
conservation efforts, the City is focused on identifying necessary and discretionary water 
use. FY 2025/26 continued the recent trend of higher usage for non-residential customers 
compared to residential customers. The impact of increased non-residential water usage 
impacts the amount of water and infrastructure needed to serve these customers.  
 
Additionally, to promote conservation and reduce discretionary use, staff is 
recommending the expansion of its current excess surcharge rate structure of one tier, to 
a two-tiered excess surcharge rate structure. The excess surcharge is applied to non-
residential customers for use that is above the customer’s winter water average. Tier 1 of 
the excess surcharge would be for use between 100%-150% of the customer’s winter 
water average, and the Tier 2 rate would be applied to all usage above 150% of the 
customer’s winter water average.  
 
Staff recommend the following non-residential usage rate adjustments: 
 
General Commercial: 13.0% increase 
General Multi-unit: 12.0% increase 
Large Commercial and Industrial: 23.0% increase 
Non-residential Landscape: 15.0% increase 
Excess Surcharge: 
General Tier 1: 13.0% increase 
General Tier 2: 23.0% increase 
Landscape Tier 1: 15.0% increase 
Landscape Tier 2: 25.0% increase

FY 2026/2027 Utility Rates Recommendation 
Page 11 
 
 
 
Similar to residential customers, all non-residential customers would have a 4.0% 
increase in their Service Charge. The recommended usage and excess surcharge 
adjustments continue the City’s efforts to achieve equity between residential and non-
residential rates. As the recommended increase is higher for the Usage Charge, the 
monthly bill increase will be smaller for customers that consume less water. 
 
Typical Non-residential Water Consumer Impact: 
 
Commercial General typical monthly bill (consumption of 9,000 gallons): 
increase of $6.70, from $87.83 to $94.53, or a 7.6% increase. 
 
Commercial Landscape typical monthly bill (consumption of 33,000 gallons): 
increase of $30.40, from $235.91 to $266.31, or a 12.9% increase 
 
Mesa Gateway Airport Fire Protection Utility 
 
Staff recommend a 30.0% increase to the Mesa Gateway Airport (MGA) Fire Protection 
demand charge. This is the third increase, of a 3-year adjustment plan, to the MGA Fire 
Protection rate in twelve years and applies to all facilities located in the North General 
Aviation Area (currently twelve customers).  This increase will align demand related 
revenues to the actual operation and maintenance costs of the MGA Fire Protection 
Utility, which are recovered through the demand charge. 
 
Interdepartmental Water 
 
For FY 2026/27, staff recommend a 3.5% increase to the interdepartmental water usage 
charges, consistent with the Residential Tier 1 usage charge adjustment. 
 
The total projected annualized increase in water rate revenue is approximately 
$17,720,000. 
 
 
WASTEWATER UTILITY 
 
Rates for residential wastewater service are comprised of two components: Service 
Charge with a flat monthly rate, and Usage Charge based on wastewater demand 
volume. Wastewater volume is calculated for each customer based on 90% of the 
average monthly water use for the three lowest water usage months from December 
through March (also known as the “winter water monthly average”). This approximates 
indoor household usage and the resulting demand on the wastewater system. A City-
wide winter water monthly average is used for new customers until an individual customer 
average can be determined. 
 
The wastewater utility forecast includes costs for chemicals, electricity, maintenance at 
the Greenfield Water Reclamation Plant, and the cost of ownership, operation, and 
maintenance of the 91st Avenue Wastewater Treatment Plant (a joint venture with the 
cities of Glendale, Phoenix, Scottsdale, and Tempe). Operating costs are projected to

FY 2026/2027 Utility Rates Recommendation 
Page 12 
 
 
 
increase by approximately $4.7M and debt service costs by approximately $1.3M from 
FY 2025/26 to FY 2026/27. 
 
Staff recommend a 7.5% increase to the Service Charge and Usage Charge for 
Residential customers, and an 8.5% increase to the Service Charge and the Usage 
Charge for Non-residential customers. 
 
Typical Residential Wastewater Consumer Impact (4,000 gallons/month): 
 
Service Charge: $1.94 increase per month, from $25.92 to $27.86 
Usage Charge (Winter water average): $0.32 increase per month, from $4.26 to 
$4.58 
 
Total average monthly bill impact: Approximately $2.26 per month, from $30.18 to 
$32.44 
 
Liberty Utilities comparison: 
Total average monthly bill: $47.52 
 
EPCOR (formerly Johnson Utilities) comparison: 
Total average monthly bill: $66.40 
 
 
Typical General Commercial Wastewater Consumer Impact: 
 
Service Charge: $2.46 increase per month, from $28.89 to $31.35 
Usage Charge (based on water consumption): $1.40 increase per month, from 
$16.17 to $17.57 
Surcharge (based on water consumption): $1.40 increase per month, from $16.64 
to $18.04 
 
Typical monthly bill impact: $5.26 per month, from $61.70 to $66.96 
 
Interdepartmental wastewater rates are recommended to be held constant. 
 
The total projected annualized increase in wastewater rate revenue is approximately 
$9,630,000. 
 
TERMS AND CONDITIONS 
 
Staff recommend various updates and clarifications for the Terms and Conditions that 
align with current City operations. This includes removing the use of a letter of credit to 
waive the security deposit, and that customers pay all applicable fees for each service 
connection, including the Capacity Fees. Staff also recommend adding language that 
states that current customers are responsible for all charges for utility service at a property 
until the customer cancels service, or until a new customer establishes service at the 
property.

FY 2026/2027 Utility Rates Recommendation 
Page 13 
 
 
 
 
Additionally, there is a small service area where customers receive City of Mesa 
wastewater and solid waste services but receive water utility services from a private utility 
provider. To ensure efficient coordination with customers and the private utility provider, 
staff recommends codifying that the account holder’s name needs to match between the 
City and private utility provider. When the City receives notification from the private utility 
provider that water service is activated for a new customer, the City will also activate solid 
waste and wastewater service. 
 
UTILITY SERVICE FEES 
 
The City is in the final phase of implementing the Advanced Metering Infrastructure (AMI) 
project for City water, natural gas, and electric customers. The City has adjusted its 
operations with the adoption of this new technology. Customers that retain their non-AMI 
meter will impose additional costs on the City, including a service call for City staff to 
perform a manual meter read, submit this information into the metering and billing 
systems, and coordinate with the property owner when necessary. To recover the costs 
of this additional service, staff is recommending a $60 per month fee to service each non-
AMI meter for these customers. This fee will not apply to reading meters that the City has 
determined cannot be switched to AMI meters (i.e., vault meters and hydrant meters).

FY 2026/2027 Utility Rates Recommendation 
Page 14 
 
 
 
ALTERNATIVES 
 
Modify the FY 2026/27 utility rate adjustment proposal. Examples include but are not 
limited to: increase, reduce, or eliminate a recommended percentage. 
 
The budgetary impact would need to be calculated by staff based on the modification 
requested. 
 
FISCAL IMPACT 
 
The projected annualized increase in revenues in the Utility Fund from the recommended 
rate adjustments is as follows: 
 
 
 
Utility  
        Annualized Increase   
 
 
Water  
 
         $17,720,000 
Wastewater  
 
$9,630,000 
 
 
Solid Waste  
 
$4,430,000 
 
 
Electric 
 
           $1,120,000 
 
 
Natural Gas  
 
$2,860,000 
 
 
 
 
  
 
The projected ending reserve balance for the Utility Fund with similar adjustment to rates 
each year is: 
 
Fiscal Year 
Ending Reserve 
Balance 
25/26 
20.6% 
26/27 
17.5% 
27/28 
16.5% 
28/29 
18.0% 
29/30 
19.9% 
30/31 
22.2% 
31/32 
24.6% 
 
 
 
 
The projected increase on the typical residential customer for by individual utility is: 
 
 
 
Utility                  
 
Monthly       Annual 
 
 
Solid Waste         
 
  $1.97       
$23.64 
Electric                
 
  $3.66   
$43.92 
Natural Gas         
 
  $2.35 
$28.20 
Water                   
 
  $1.86  
$22.32 
Wastewater          
 
  $2.26  
$27.12 
 
 
Attachments: 
1. 
FY 2026/27 Utility Rate Adjustment Recommendation Summary  
2. 
City of Mesa Utility Fund Cash Flow Projections