September 3, 2026 Audit Finance and Enterprise Committee

OFFICE OF THE CITY CLERK
AUDIT, FINANCE & ENTERPRISE COMMITTEE
MINUTES
September 3, 2026
The Audit, Finance & Enterprise Committee of the City of Mesa met in the Study Session room at City
Hall, 20 East Main Street, on September 3, 2026, at 7:30 a.m.
COMMITTEE PRESENT COMMITTEE ABSENT STAFF PRESENT
Rich Adams* Alicia Goforth, Chairperson Jothi Beljan
Scott Somers Mike Kennington
Holly Moseley
(*Participated in the meeting through the use of video conference equipment.)
Acting Chairperson Somers conducted a roll call.
Acting Chairperson Somers excused Chairperson Goforth from the entire meeting.
1. Items from citizens present.
There were no items from citizens present.
2-a. Hear a presentation, discuss, and provide a recommendation for the proposed Audit Plan for FY
2026/2027.
City Auditor Joseph Lisitano displayed a PowerPoint presentation. (See Attachment 1)
Mr. Lisitano provided an overview of the proposed Fiscal Year (FY) 2026/2027 Audit Plan,
including audits currently in progress, carryover audits, new audits, follow-up reviews, and other
ongoing internal audit activities. (See Page 2 of Attachment 1)
Mr. Lisitano stated that current audits include a review of City-owned vehicle use to determine
whether employees are complying with applicable policies; a review of special pay programs;
and a post-construction audit of the Arizona State University (ASU) project at City Center to
determine whether construction and cost requirements had been met. He noted that the ASU
audit is substantially complete and awaiting project closeout before a final report is issued. He
added that an audit of Mesa Arts Center revenue collection, recording and collection processes,
as well as contract-related matters is also in progress. (See Page 3 of Attachment 1)

Audit, Finance & Enterprise Committee
September 3, 2026
Page 2
Mr. Lisitano discussed the Police Department mental health audit in progress. He said the intent
of the audit is to determine whether appropriate controls are in place to ensure compliance with
applicable policies and statutes when officers transport individuals experiencing a mental health
crisis to treatment facilities. He clarified that the audit is operational in nature and does not
address financial matters. He reviewed the audit of the public records request process,
explaining that individual departments are responsible for responding to requests and that the
audit would evaluate the effectiveness and timeliness of those processes and determine
compliance with applicable requirements. (See Page 4 of Attachment 1)
In response to a question from Acting Chairperson Somers, City Clerk Holly Moseley stated that
the City Clerk’s Office had met with Intergovernmental Relations regarding potential legislation
involving artificial intelligence. She noted that a specific statutory response timeframe was not
discussed but confirmed that the City’s internal process generally uses a 10-day response
target. She added that the Police Department is reviewing its records request process and other
software systems that may better satisfy its needs.
Mr. Lisitano reviewed the audits planned for FY 2027, noting that the Water Resources,
Facilities Management, and Code Compliance audits were carried over from the FY 2026 Audit
Plan, and he explained the purpose of each audit. He identified Police Department towing
services and Information Technology (IT) as additional areas in the planned audit schedule.
(See Page 5 of Attachment 1)
Responding to a question from Acting Chairperson Somers, Mr. Lisitano confirmed that the
audit of Police Department towing services is proposed to determine whether appropriate
controls are in place to monitor the towing contract and ensure compliance with contract terms.
Mr. Lisitano discussed plans for the IT audits and stated that, as part of the budget process, an
additional auditor position was approved specifically to conduct IT audits. He advised that the
newly hired auditor has extensive government and information technology audit experience. He
added that a citywide IT risk assessment will first be conducted to help determine the scope and
priorities for future IT audits.
Mr. Lisitano highlighted follow-up reviews from prior audits, including the Department of
Innovation and Technology software audit and the Transportation Department audit. He noted
that most corrective actions have been completed; however, both departments are
implementing new software and systems, which will require additional time to complete. He
stated that a cybersecurity audit follow-up is also included in the plan. He explained that the
internal auditor conducts follow-up reviews, including those involving minor findings, to verify the
corrective actions from previous audits have been implemented. (See Pages 6 and 7 of
Attachment 1)
Mr. Lisitano pointed out other internal auditor activities conducted throughout the year, including
unannounced cash counts, policy-related reviews, training, credit card reviews, fraud-related
matters, and consultation services. He explained that credit card reviews address both the
information technology controls associated with card processing and operational controls at City
locations where credit cards are accepted. He stated that the internal auditor remains available
to review reported fraud concerns, provide consultation when requested, and conduct
unscheduled audits at the direction of the City Council. He reiterated that a citywide IT risk
assessment will be completed before determining the first specific IT audit to be conducted.
(See Page 8 of Attachment 1)

Audit, Finance & Enterprise Committee
September 3, 2026
Page 3
Acting Chairperson Somers thanked staff for the presentation.
2-b. Hear a presentation, discuss, and provide direction on the Utility Fund forecast and
recommended rate and fee adjustments.
Office of Management and Budget Director Brian Ritschel introduced Office of Management and
Budget Deputy Director Chris Olvey and displayed a PowerPoint presentation. (See
Attachment 2)
Mr. Olvey explained that the Utility Fund is managed as a single fund, with each utility operating
as a separate business center, and that financial performance can fluctuate from year to year
based on factors such as weather and customer consumption. He noted that warmer weather in
FY 25/26 increased revenues for some utilities while reducing natural gas revenues. He added
that reserve balances provide a financial safeguard for unforeseen circumstances and help
stabilize utility rates over time. (See Page 2 of Attachment 2)
Mr. Olvey reviewed the City’s financial principles, including maintaining balanced net sources
and uses, targeting a reserve balance of at least 20%, implementing smooth and predictable
rate adjustments, promoting equity between residential and non-residential rates, and
maintaining affordable utility services. (See Page 3 of Attachment 2)
Mr. Olvey discussed the FY 26/27 adopted budget forecast. He pointed out the impact of the
Council-approved capacity fee and noted that growth-related projects are funded by growth
rather than existing ratepayers. He explained that the forecast is updated periodically using
revised revenue and expenditure estimates and annual reviews of utility account and
consumption trends. He reported that updated FY 25/26 estimates shifted net sources and uses
from negative to positive and increased the projected fund balance, with the FY 2027/2028
reserve improving from 13% to 16.4%. (See Pages 4 and 5 of Attachment 2)
Mr. Olvey reviewed the factors contributing to the improved FY 25/26 year-end estimates,
including higher-than-anticipated water consumption, operating savings at water treatment and
reclamation plants, utility debt service savings, lower water commodity costs, and reduced Solid
Waste fleet and landfill expenses. He stated that the water-related savings were primarily due to
lower chemical and power costs, while Solid Waste savings resulted from lower fleet costs and
effective management of landfill and disposal contracts. (See Page 6 of Attachment 2)
Water Resources Director Joe Giudice introduced Deputy Director Chase Carlile and Utilities
Financial Analyst Erik Hansen.
Mr. Carlile discussed the projected Water Resources department operating and debt service
costs, noting that both are major factors in determining proposed utility rates. He recalled that
the operating costs for FY 25/26 were lower than anticipated due to savings in chemicals,
electricity, water commodity costs, and the City of Mesa’s (COM) share of operating expenses
at the Val Vista Water Treatment Plant. He advised that operating costs are expected to
increase over the forecast period due to inflation and additional expenses associated with the
Signal Butte Water Treatment Plant expansion. He reviewed existing and projected debt service
obligations, including future debt associated with groundwater well rehabilitation and equipping,
improvements at the Val Vista Water Treatment Plant, and planned electrical upgrades at the
Brown Road Water Treatment Plant. (See Pages 7 through 10 of Attachment 2)

Audit, Finance & Enterprise Committee
September 3, 2026
Page 4
Mr. Hansen presented the proposed water rate structure. He stated that residential usage rates
would remain unchanged, while the proposed service charge increase would be reduced from
4.5% to 4%; the drought commodity charge would increase from $0.08 to $0.13 per 1,000
gallons and would apply only during designated water shortages to monthly consumption
exceeding 3,000 gallons. He explained that the proposed rate adjustments for other non-
residential customers remain unchanged from the prior forecast; however, the large commercial
rate increase would change from 13% to 23%. (See Pages 11 and 12 of Attachment 2)
Acting Chairperson Somers proposed creating a second excess-water tier to distinguish
between moderate usage above a customer’s winter water average and usage exceeding 150%
of that baseline.
Mr. Hansen highlighted the affordability of utilities in Mesa. He stated that the proposed water
and wastewater rates remain below the commonly used affordability benchmark of 4.5% of
household income. He confirmed that the combined water and wastewater costs are estimated
at approximately 1.1% of the citywide median household income and 2.9% for a household
supported by one full-time minimum wage income. He reviewed the estimated impact of the
proposed rates on typical customers, noting that a residential customer using 6,000 gallons per
month would see an increase of approximately $1.86 per month, or 4.2%, resulting in a monthly
bill of $46.50. He added that the proposed residential impact remains essentially unchanged
from the prior forecast and clarified that the drought commodity charge applies only to
consumption exceeding 3,000 gallons during applicable shortage conditions. (See Pages 18
and 19 of Attachment 2)
Acting Chairperson Somers requested that staff evaluate the possibility of decreasing the
service charge for Tier 1 customers using 3,000 gallons or less of water per billing cycle.
In response to the request from Acting Chairperson Somers, Mr. Ritschel clarified that the
drought commodity charge is a pass-through used to recover increased purchased water costs
and does not generate revenue for operations or maintenance. He agreed to evaluate a
reduction in the service charge and provide an update on the potential impact.
Mr. Carlile outlined the Wastewater Program operating and debt service forecasts and noted
that operating costs are expected to increase modestly due to inflation, while electricity and
chemical costs are beginning to stabilize. He highlighted planned debt-funded projects,
including rehabilitation of the Baseline Road interceptor, process improvements at the
Northwest Water Reclamation Plant, and the City’s share of the Greenfield Water Reclamation
Plant expansion. (See Pages 20 through 22 of Attachment 2)
Discussion ensued regarding the planned bond-funded projects and the potential challenges
associated with future interest rate fluctuations and increased debt service costs.
Mr. Hansen explained that the proposed wastewater rate adjustments will remain unchanged
from the prior forecast. He confirmed that the residential service and usage charges are
proposed to increase by 7.5%, while non-residential service and usage charges are proposed to
increase by 8.5%. He stated that the recommendations continue the previously communicated
rate plan while addressing operating and capital needs and maintaining predictable rate
adjustments for customers. (See Pages 23 and 24 of Attachment 2)

Audit, Finance & Enterprise Committee
September 3, 2026
Page 5
Energy and Sustainability Director Scott Bouchie introduced Senior Fiscal Analyst John Petrof.
Mr. Petrof summarized the Electric Utility operating and supply cost forecasts and noted modest
operating cost increases related to salaries, merit increases, inflation, system growth, and
ongoing maintenance. (See Pages 25 through 27 of Attachment 2)
Mr. Bouchie clarified that projected capital costs are significantly lower than those for the Water
Utility despite appearing substantial on the chart due to differences in scale. He reviewed
electric supply costs and pointed out that approximately half of a customer’s electric bill reflects
pass-through commodity and transmission costs. He stated that the COM’s electric rates remain
competitive with Salt River Project (SRP) and that long-term resource contracts help stabilize
future commodity costs. He referenced a rate increase implemented by SRP in November 2025
and reported that Arizona Public Service (APS) has a pending rate increase that is anticipated
to be considered by the end of 2026. (See Pages 28 through 30 of Attachment 2)
Mr. Petrof compared the proposed electric rates with SRP and noted that the COM remains
competitive across multiple residential and commercial usage levels. He explained that
declining electric supply costs are expected to reduce overall residential bills despite the
proposed rate adjustments. He stated that the proposed residential system service charge
increase has been reduced from $3 to $2, resulting in an estimated monthly increase of $3.66
for an average residential customer. He advised that the proposed adjustments for commercial
customers include changes to system service and usage charges, resulting in an estimated
monthly increase of $11.74, or 2.5%, for an average commercial customer. (See Pages 31
through 35 of Attachment 2)
Mr. Petrof reviewed the Natural Gas Utility operating cost forecast. He stated that projected
increases are primarily related to salaries and merit adjustments, inflation, and increased fleet
costs. (See Pages 36 and 37 of Attachment 2)
Mr. Bouchie discussed the Natural Gas Utility debt service forecast. He advised that it includes
significant capital projects in the Magma area to support continued growth. (See Page 38 of
Attachment 2)
In response to a question from Acting Chairperson Somers, Mr. Bouchie reported that the
Advanced Metering Infrastructure (AMI) meter replacement project is expected to be completed
by the end of September 2026.
Responding to questions from Committeemember Adams, Mr. Bouchie confirmed that the COM
currently serves approximately 83,000 natural gas meters, with that number expected to
increase as development continues in the Magma service area. He discussed employee
recruitment and retention within the Electric and Natural Gas utilities, and the COM’s efforts to
remain competitive with comparable utility employers in recruiting and retaining employees for
highly specialized positions. He stated that staff are working with Human Resources and the
City Manager’s Office to evaluate potential compensation adjustments, particularly for technical
positions such as natural gas welders, to support long-term retention.
Mr. Petrof stated that Southwest Gas has announced a proposed residential rate increase of
approximately 10.7%, or $5.18 per month, beginning in April 2027. (See Page 39 of Attachment
2)

Audit, Finance & Enterprise Committee
September 3, 2026
Page 6
Mr. Bouchie pointed out that the COM remains competitive with Southwest Gas in natural gas
commodity and transmission costs, attributing the favorable pricing to effective contract
management and resource procurement. (See Page 40 of Attachment 2)
Mr. Petrof compared residential natural gas bills with Southwest Gas and noted that the COM’s
bills are lower for customers with average and high usage but slightly higher for customers with
low usage, primarily due to differences in the monthly service charge. (See Page 41 of
Attachment 2)
Responding to a question from Acting Chairperson Somers, Mr. Bouchie explained that
Southwest Gas structures its rates with a greater portion of costs recovered through commodity
usage charges, resulting in lower costs for lower-usage customers and higher costs for higher-
usage customers.
Mr. Petrof outlined a slight adjustment to the previously forecasted residential natural gas rates
to provide more stable fixed revenues. He advised that the proposed system service charge
increase would change from $1.00 to $1.50, while usage rate increases would be reduced. He
noted that the resulting impact on an average residential customer would be approximately
$2.35 per month, compared with the previously projected $2.25 increase. (See Page 42 of
Attachment 2)
Mr. Petrof stated that the COM’s commercial natural gas rates are generally comparable to
Southwest Gas rates across small, average, and large customer usage levels. He reported that
the proposed commercial gas rates remain unchanged from the prior forecast, including a 3%
system service charge increase, 3% Tier 1 usage increase, and 5% Tier 2 usage increase. He
added that the estimated increase for the average commercial customer would be
approximately $11.84 per month, or 2.5%. (See Pages 43 and 44 of Attachment 2)
Mr. Bouchie explained the proposed addition of a manual meter reading fee for customers who
have not transitioned to AMI meters to recover the additional costs of manually reading and
processing those meters. He reported that AMI meters have improved operational efficiency by
reducing unnecessary service calls and allowing staff to remotely verify whether outages are
occurring on the COM’s system or on the customer’s side of the meter. (See Page 45 of
Attachment 2)
Solid Waste Director Sheri Collins discussed Solid Waste operating cost pressures, including
fleet expenses, landfill disposal costs, salaries, and recycling costs. She noted that recycling
shifted from generating revenue to requiring payment beginning in June 2025; however,
recycling remains less costly than landfill disposal. She added that recycling costs are market-
driven and will continue to be monitored, particularly as existing recycling contracts approach
expiration. (See Pages 46 through 48 of Attachment 2)
Ms. Collins presented the proposed Solid Waste rate adjustments in response to increased
fleet, landfill, and personnel costs. She stated that the residential barrel rate is proposed to
increase by 5.5%, resulting in a monthly rate of $36.91 for a 90-gallon container and $32.95 for
a 60-gallon container. She pointed out the proposed $0.05 increase to the Mesa Green and
Clean fee, bringing the total monthly residential Solid Waste bill to $37.96. She added that
additional proposed adjustments include increasing bulk item collection from $31 to $35 per
load and appliance collection from $19 to $23 per appliance. (See Pages 49 through 53 of
Attachment 2)

Audit, Finance & Enterprise Committee
September 3, 2026
Page 7
Ms. Collins discussed proposed commercial Solid Waste rate adjustments, noting that the COM
competes with private-sector providers and seeks to remain competitive while recovering
increased operating costs. She stated that an overall 6% increase is proposed for commercial
front-load trash service, with adjustments to base rates, multi-container discounts, and out-of-
zone service charges. She confirmed that a 9% increase is being proposed for commercial
front-load recycling while maintaining recycling rates below comparable trash service rates.
(See Pages 54 and 55 of Attachment 2)
Ms. Collins outlined proposed commercial roll-off rate adjustments. She added that the COM
continues to balance cost recovery with competitive rates. She advised that the proposed
changes include increases to per-ton disposal and hauling fees, resulting in an estimated
$21.50 increase for a typical one-time roll-off customer. (See Page 56 of Attachment 2)
In response to a question posed by Committeemember Adams, Ms. Collins stated that the
Commercial Solid Waste program currently has capacity to add several hundred customers,
with future growth primarily limited by available trucks and staffing. She noted that a commercial
growth plan is being developed and that any significant expansion would require evaluation of
the necessary capital investment and anticipated return.
Discussion ensued regarding the need to pursue additional commercial business cautiously
while considering market competition and return on investment.
Mr. Olvey summarized the recommended utility rate adjustment forecast, noting that the first
three years remain generally consistent with the updated forecast. He added that, in the later
years, the projected non-residential water rate increase for FY 28/29 is reduced from 13% to 5%
as greater rate equity is achieved between residential and nonresidential customers. He
confirmed slight reductions in the projected FY 29/30 residential wastewater and solid waste
rate increases. (See Page 59 of Attachment 2)
Mr. Ritschel outlined the revised schedule for consideration of the proposed utility rates, with
Council discussion scheduled for September 24, 2026, consideration of the Notice of Intent on
October 5, introduction of the rates on December 1, and adoption on December 8. He stated
that the revised schedule would result in a February 1, 2027, effective date and would not
significantly impact the financial forecast. He added that further delays could affect the forecast
and extend consideration into the next calendar year. (See Page 60 of Attachment 2)
Acting Chairperson Somers requested further review of the commercial customer classification
and suggested that short-term rental properties be included within that category.
Acting Chairperson Somers thanked staff for the presentation.
3. Adjournment.
Without objection, the Audit, Finance & Enterprise Committee meeting adjourned at 8:50 a.m.

Audit, Finance & Enterprise Committee
September 3, 2026
Page 8
I hereby certify that the foregoing minutes are a true and correct copy of the minutes of the Audit,
Finance & Enterprise Committee meeting of the City of Mesa, Arizona, held on the 3rd day of
September 2026. I further certify that the meeting was duly called and held and that a quorum was
present.
_______________________________
HOLLY MOSELEY, CITY CLERK
sr
(Attachments – 2)

and Committee 2026
Finance, 3, 1 8 of
Audit, Enterprise September Attachment 1 Page
City Auditor
Proposed FY 2027 Audit Plan
Presentation to the Audit, Finance and Enterprise Committee
September 3, 2026
Joseph Lisitano, City Auditor

and Finance, Committee Enterprise 2026 3, September 1 Attachment 8 of 2
Audit, Page Audit Plan Overview
• Current work in progress
• Audits planned for FY 2027
• Follow-up reviews due in FY 2027
• Other activities
2

and Finance, Committee 2026 3, 1 8 of
Audit, Enterprise September Attachment 3 Page
Current Work in Progress
• Citywide – Take Home Vehicles
• Citywide – Special Pay Programs
• Engineering – ASU Facilities at Mesa City Center Post-
Construction
• Arts & Culture – Mesa Arts Center Revenues
3

and Finance, Committee 2026 3, 1 8 of
Audit, Enterprise September Attachment 4 Page
Current Work in Progress
• Police Department – Mental Health Support Team
• Police Department – Off-Duty Employment Program
• City Clerk – Public Records Request
4

and Finance, Committee 2026 3, 1 8
Audit, Enterprise September Attachment of 5 Page
Audits Planned for FY 2027
• *Water Resources – Annual Ordering and Reporting
• *Facilities Management – Work Order Process
• *Code Compliance – Case Management
• Police Department – Towing Services
• Information Technology Audit – TBD
*Carried over from the FY 2026 Audit Plan. 5

and Finance, Committee 2026 3, 1 8 of
Audit, Enterprise September Attachment 6 Page
Follow-up Reviews
• DoIT – Software/Application Asset Management (2nd
Follow-up)
• Transportation – Street Maintenance (2nd Follow-up)
• DoIT – Cybersecurity
6

and Finance, Committee 2026 3, 1 8
Audit, Enterprise September Attachment of 7 Page
Follow-up Reviews
• Police Department – Criminal Investigations Case
Management
• Human Resources – Hiring and Recruitment Practices
7

and Finance, Committee 2026 3, 1 8
Audit, Enterprise September Attachment of 8 Page
Other Activities
• Biennial Citywide Cash Handling Audits (next report FY 2027)
• Annual Credit Card Security Review
• Fraud & Ethics Hotline Investigations
• Consulting (limited reviews, other projects, etc.)
• Unscheduled Audits
• Information Technology Risk Assessment
8

and Committee 2026
Finance 3, 2 80
Enterprise September Attachment of 1
Audit, Page
FY 2026 /27 Utility Fund Forecast &
Rates Recommendation
Audit, Finance, and Enterprise Committee
Presenters: Brian A. Ritschel – Management & Budget Director
Joe Giudice – Water Resources Director
Scott Bouchie – Energy Resources Director
Sheri Collins – Solid Waste Director
September 3 , 2026

and Committee 2026
Finance 3, 2 80
Enterprise September Attachment of 2
Audit, Page Utility Operations
Each utility is operated as a Reserve balance provides a safety Reserve balance can be used to
separate business center but net for unforeseen conditions smooth rate adjustments year to
treated as one fund year
2

and Committee 2026
Finance 3, 2 80
of
Enterprise September Attachment 3
Audit, Page
Financial Principles
BALANCE NET SOURCES 20% OR HIGHER RESERVE RATE ADJUSTMENTS THAT
AND USES FUND BALANCE ARE PREDICTABLE AND
SMOOTHED THROUGHOUT
THE FORECAST
EQUITY BETWEEN AFFORDABLE UTILITY
RESIDENTIAL AND NON- SERVICES
RESIDENTIAL RATES
3

and Committee 2026
Finance 3, 2 80
Enterprise September Attachment of 4
Audit, Page FY 26/27 Adopted Budget
4

and Committee 2026
Finance 3, 2 80 of
Audit, Enterprise September Attachment 5 Page Updated Forecast – Budgeted Rate Adjustments
5

and Committee 2026
Finance 3, 2 80 of
Audit, Enterprise September Attachment 6 Page FY 25/26 Year End Estimate Updates
• Improvement in net sources and uses from Quarter 3 Year End
Estimates to Quarter 4 Year End Estimates
• Significant favorable items:
• $ 6 .9 M Higher than anticipated water consumption
• $ 2.6 M Water Treatment and Water Reclamation Plant operating expenses
• $ 2.3 M refunding of utility debt service
• $ 2.1M Water commodity purchases (CY 2025 CAP reconcile credit)
• $ 2.1M Solid Waste fleet and landfill charges
6

and Committee 2026
Finance 3, 2 80 of
Audit, Enterprise September Attachment 7 Page
Water Resources Department
Rates Recommendations
Joe Giudice – Director
Chase Carlile – Deputy Director
Erik Hansen – Utilities Financial Analyst

and Committee 2026
Finance 3, 2 80 of
Audit, Enterprise September Attachment 8 Page
Water Program
Recommended Rate Adjustments
8

and Committee 2026
Finance 3, 2 80
of
Enterprise September Attachment 9
Audit, Page Operating Costs
$140M
$120M
$107.3M
$103.9M
$98.3M $101.0M
$100M $94.5M
$91.5M
$78.6M $77.9M
$80M $73.2M
$61.8M $64.0M
$60M
$40M
$20M
$0M
FY21/22 FY22/23 FY23/24 FY24/25 FY25/26 FY26/27 FY27/28 FY28/29 FY29/30 FY30/31 FY31/32
Actual Actual Actual Actual Estimate Projected Forecast Forecast Forecast Forecast Forecast
9

and Committee 2026
3, 2 80
Finance of
Enterprise September Attachment 10
Audit, Page Debt Service
$120M
$100M $97.7M
$90.7M
$86.1M $21.3M
$81.4M $15.9M
$80M $76.5M $6.3M $11.1M
$72.2M $3.9M
$67.2M
$60M $57.1M
$52.2M
$47.9M $49.3M
$40M $72.6M $75.0M $75.0M $74.9M $76.4M
$20M
$0M
FY21/22 FY22/23 FY23/24 FY24/25 FY25/26 FY26/27 FY27/28 FY28/29 FY29/30 FY30/31 FY31/32
Actual Actual Actual Actual Estimate Forecast Forecast Forecast Forecast Forecast Forecast
Existing Debt Service Projected Future Debt Service
10

and Committee 2026
Finance 3, 2 80 of
11 Rate Adjustments that are Predictable and Smoothed
Enterprise September Attachment
Audit, Page
Recommended Rate Adjustments
Budget Forecast
Recommended Rate
Rate Component Customer Recommended Rate
Adjustment
Adjustment
Service Charge
All Customers +4.5% +4.0%
Drought Commodity Charge
All Customers +$0.08 +$0.13
Usage Charge
Residential
• Tier I (4,000 – 6,000 gallons) +3.5% +3.5%
• Tier 2 (7,000 – 14,000 gallons) +3.5% +3.5%
• Tier 3 (15,000 – 24,000 gallons) +4.5% +4.5%
• Tier 4 (>24,000 gallons) +4.5% +4.5%
Commercial +13.0% +13.0%
11

and Committee 2026
Finance 3, 2 80 of
12 Rate Adjustments that are Predictable and Smoothed
Enterprise September Attachment
Audit, Page
Recommended Rate Adjustments
Budget Forecast
Rate Recommended Rate
Customer Recommended Rate
Component Adjustment
Adjustment
Usage Charge
Large Commercial +13.0% +23.0%
Other Non-residential +12.0% +12.0%
Non-residential Landscape +15.0% +15.0%
Surcharge
Excess Surcharge - General
+13.0%
• Tier 1 (>100% – 150% of WWA) +13.0%
(>100% of WWA)
• Tier 2 (>150% of WWA) N/A +23.0%
Excess Surcharge - Landscape
+15.0%
• Tier 1 (>100% – 150% of WWA) +15.0%
(>100% of WWA)
• Tier 2 (>150% of WWA) N/A +25.0%
12

and Committee 2026
3, 2 80
Finance of
Enterprise September Attachment 13
Audit, Page Excess Water Surcharge
Existing Excess Water Surcharge:
Commercial Landscape Example
16
14
12
Winter Water Average
10 8 kgals
$2.99/kgal
Existing Excess Surcharge Threshold (>100% WWA)
kgals 8
6
4
2
0
December January February March April May June July August September October November
13

and Committee 2026
3, 2 80
Finance of
Enterprise September Attachment 14
Audit, Page Excess Water Surcharge
Proposed Tiered Excess Water Surcharge:
Commercial Landscape Example
16
14
$3.74/kgal
Excess Surcharge – Tier 2 (>150% WWA)
12
Winter Water Average
10 8 kgals
$3.44/kgal
Excess Surcharge – Tier 1 (>100 – 150% WWA)
kgals 8
6
4
2
0
December January February March April May June July August September October November
14

and Committee 2026
3, 2 80
Finance of
15 Historical Excess Surcharge Distribution -
Enterprise September Attachment
Audit, Page
Under Proposed Tiers
General Commercial
Percent of Bills Percent of Water Monthly Consumption by Percent Winter Water
Consumed Average
100% 100% 800K
22%
80% 80% 36% 600K
19% kgals
60% 60%
23% 400K
40% 40%
59% 200K
20% 20% 41%
0K
0% 0% 1 2 3 4 5 6 7 8 9 10 11 12
2025 2025 2025
15

and Committee 2026
3, 2 80
Finance of
16 Historical Excess Surcharge Distribution -
Enterprise September Attachment
Audit, Page
Under Proposed Tiers
Commercial Landscape
Percent of Water Monthly Consumption by Percent Winter Water
Percent of Bills
Consumed Average
100% 100% 800K
80% 45% 80% 600K
69% kgals
60% 60%
400K
16%
40% 40%
200K
14%
20%
20% 39%
17% 0K
0% 1 2 3 4 5 6 7 8 9 10 11 12
0% 2025
2025 2025
16

and Committee 2026
Finance 3, 2 80 of
Enterprise September Attachment 17
Audit, Page
Equity Between Residential and Non -residential Rates
56%
52%
48%
44%
Estimate Projected Forecast Forecast
FY 25/26 FY 26/27 FY 27/28 FY 28/29
Residential Rate Revenue Non-residential Rate Revenue
Residential Consumption Non-residential Consumption
FY 25/26 FY 26/27 FY 27/28 FY 28/29
Estimate Projected Forecast Forecast
(parity) (equity)
Residential Rate Revenue 53% 50% 48% 47%
Non-residential Rate Revenue 47% 50% 52% 53%
Residential Consumption 46% 47% 47% 47%
Non-residential Consumption 54% 53% 53% 53%
17

and Committee 2026
3, 2 80
Finance of
Enterprise September Attachment 18 Affordable Utility Services
Audit, Page
High Water Burden
5%
4%
3%
2%
1%
0%
2023 2024 2025 2026 2027 (proposed)
EPA's Threshold of "High Water Burden"
Typical Customer's Annual Water and Wastewater Expenses as a percent of Minimum Wage (yearly)
Typical Customer's Annual Water and Wastewater Expenses as a percent of Median Household Income
The 4.5 percent threshold is widely used in literature (Cardoso & Wichman, 2022a; Berahzer et al., 2023; Heminger et al., 2023; Mack & Wrase, 2017). Use of the 4.5
percent threshold is largely consistent with the Hours of Labor at Minimum wage metric, which suggests a threshold of one day (8 hours), or 4.6 percent of work hours
in a month, assuming a 40-hour work week.
18

and Committee 2026
Finance 3, 2 80 of
Enterprise September Attachment 19
Audit, Page Customer Impact
Current Prior Forecast Recommended Impact to Recommended Rate Impact to
Typical Customer
Bill Rate Adjustment Current Bill Adjustment Current Bill
Service Charge: +4.5% Service Charge: +4.0%
Residential $44.64 Usage Charge: +3.5% +4.2% $46.51 Usage Charge: +3.5% +4.2% $46.50
(6 kgals/month) (+$1.87) (+$1.86)
Drought Surcharge: +$0.08/kgal Drought Surcharge: +$0.13/kgal
Multi-unit Service Charge: +4.5% Service Charge: +4.0%
Development $41.48 Usage Charge: +12.0% +8.8% $45.12 Usage Charge: +12.0% +9.2% $45.28
(+$3.64) (+$3.80)
(6 kgals/month) Drought Surcharge: +$0.08/kgal Drought Surcharge: +$0.13/kgal
Commercial – Service Charge: +4.5% Service Charge: +4.0%
General $87.83 Usage Charge: +13.0% +7.6% $94.51 Usage Charge: +13.0% +7.6% $94.53
(+$6.68) (+$6.70)
(9 kgals/month) Drought Surcharge: +$0.08/kgal Drought Surcharge: +$0.13/kgal
Commercial – Service Charge: +4.5% Service Charge: +4.0%
Landscape $235.91 Usage Charge: +15.0% +12.4% $265.09 Usage Charge: +15.0% +12.9% $266.31
(+$29.18) (+$30.40)
(33 kgals/month) Drought Surcharge: +$0.08/kgal Drought Surcharge: +$0.13/kgal
19

and Committee 2026
Finance 3, 2 80 of
Audit, Enterprise September Attachment 20 Page
Wastewater Program
Recommended Rate Adjustments
20

and Committee 2026
3, 2 80
Finance of
Enterprise September Attachment 21
Audit, Page Operating Costs
$70
Millions
$60 $56.7M
$52.6M $53.9M
$51.1M
$49.3M
$50 $47.3M
$42.7M
$40.1M
$40 $37.6M
$32.0M
$29.6M
$30
$20
$10
$0
FY21/22 FY22/23 FY23/24 FY24/25 FY25/26 FY26/27 FY27/28 FY28/29 FY29/30 FY30/31 FY31/32
Actual Actual Actual Actual Estimate Projected Forecast Forecast Forecast Forecast Forecast
21

and Committee 2026
3, 2 80
Finance of
Enterprise September Attachment 22
Audit, Page Debt Service
$70M $67.1M
$60.2M
$60M
$55.3M
$52.3M
$29.3M
$50M $49.1M
$22.5M
$44.3M $5.7M $10.9M $16.7M
$43.0M
$41.5M $41.1M
$39.5M
$40M $37.5M
$30M
$20M $43.3M $41.5M
$38.7M $37.7M $37.9M
$10M
$0M
FY21/22 FY22/23 FY23/24 FY24/25 FY25/26 FY26/27 FY27/28 FY28/29 FY29/30 FY30/31 FY31/32
Actual Actual Actual Actual Estimate Forecast Forecast Forecast Forecast Forecast Forecast
Existing Debt Service Projected Future Debt Service
22

and Committee 2026
Finance 3, 2 80 of
Enterprise September Attachment 23 Rate Adjustments that are Predictable and Smoothed
Audit, Page
Recommended Rate Adjustments
Prior Forecast
Rate Recommended
Customer Recommended Rate
Component Rate Adjustment
Adjustment
Service Charge
Residential +7.5% +7.5%
Non-residential +8.5% +8.5%
Usage Charge
Residential +7.5% +7.5%
Non-residential +8.5% +8.5%
23

and Committee 2026
Finance 3, 2 80 of
Enterprise September Attachment 24
Audit, Page Customer Impact
Recommended Rate Impact to
Typical Customer Current Bill
Adjustment Current Bill
Residential Service Charge: +7.5% $32.44
$30.18 +7.5%
(4 kgals/month) Usage Charge: +7.5% (+$2.26)
Commercial $61.70 Service Charge: +8.5% +8.5% $66.96
(9 kgals/month) Usage Charge: +8.5% (+$5.26)
24

and Committee 2026 3, 2 80
Finance Enterprise September Attachment of 25
Audit, Page
Energy Resources
Rates Recommendations
Scott Bouchie – Director
John Petrof – Senior Fiscal Analyst

and Committee 2026
Finance 3, 2 80 of
Enterprise September Attachment 26
Audit, Page
Electric
26

and Committee 2026
3, 2 80
Finance of
Enterprise September Attachment 27
Audit, Page
Increasing Operating Costs on the Electric Utility
$14
Millions
$12 $11.3M
$10.6M $10.8M $11.0M
$10.5M
$10.0M $10.1M
$10 $9.3M $9.1M
$8.5M
$8.1M
$8
$6
$4
$2
$0
FY 21/22 FY 22/23 FY 23/24 FY 24/25 FY 25/26 FY 26/27 FY 27/28 FY 28/29 FY 29/30 FY 30/31 FY 31/32
Actuals Actuals Actuals Actuals Estimate Projected Forecast Forecast Forecast Forecast Forecast
27

and Committee 2026
3, 2 80
Finance of
Enterprise September Attachment 28
Audit, Page
Increasing Debt Service Costs on the Electric Utility
$10.0M
Millions $9.3M
$9.0M $8.8M
$8.1M
$8.0M
$2.5M $3.0M
$7.0M $6.9M $1.9M
$6.0M $5.8M $1.3M
$0.8M
$5.0M $4.8M $4.9M $4.8M
$4.1M $4.0M
$4.0M
$3.2M
$3.0M $6.2M $6.4M $6.3M
$5.6M
$5.0M
$2.0M
$1.0M
$0.0M
FY21/22 FY22/23 FY23/24 FY24/25 FY25/26 FY26/27 FY27/28 FY28/29 FY29/30 FY30/31 FY31/32
Actual Actual Actual Actual Estimate Forecast Forecast Forecast Forecast Forecast Forecast
Existing Debt Service Projected Future Debt Service
28

and Finance Committee 2026 3, 2 80 of
Audit, Enterprise September Attachment 29 Page Total Residential Customer Electric Supply Cost – SRP vs COM
29

and Committee 2026
Finance 3, 2 80 of
Audit, Enterprise September Attachment 30 Page
SRP/APS Increases
SRP – November 2025 Rate Increase
• Overall - 2.4% price increase
• Average residential user bill impact - $5.61
• Average Usage – 1,117 kWh
• Tiered Monthly Service Charge
• Tier 1 – Multifamily home - $20 (current)
• Tier 2 – Single-family home with average usage - $30
• Tier 3 – Large single-family home user - $40 (About 3% of residential customers)
APS – 2025 Rate Case
• Rate review process continues through end of 2026
• Average residential user bill impact - $20 per month
• Average Usage – 1,000 kWh
30

and Committee 2026
Finance 3, 2 80 of
Enterprise September Attachment 311 Residential Electric Bill Comparison
Audit, Page
31

and Committee 2026
Finance 3, 2 80 of
Audit, Enterprise September Attachment 32 Page Residential Electric Bills
Small Average Large
Actual – FY 24/25 $64.06 $141.51 $235.10
Actual – FY 25/26 $63.88 $137.49 $228.34
Proposed $61.44 $126.76 $207.93
• Lower electric supply costs have assisted in lowering total bill amounts
*Based on weather normalized residential forecasted usage
32

and Committee 2026 3, 2 80
Finance Enterprise September Attachment of 33 Proposed Residential Electric Rates
Audit, Page
COMPONENT CURRENT PROPOSED CHANGE PRIOR
FORECAST
SYSTEM SERVICE $20.50 $22.50 $2.00 $3.00
CHARGE
USAGE CHARGE Tier 1 - $0.05336 Tier 1 - $0.05496 3% 3%
SUMMER per kWh Tier 2 - $0.05228 Tier 2 - $0.05437 4% 4%
USAGE CHARGE Tier 1 - $0.04533 Tier 1 - $0.04805 6% 6%
WINTER per kWh Tier 2 - $0.04741 Tier 2 - $0.05026 6% 6%
MONTHLY BILL $123.10 $126.76 $3.66 $4.66
(Average Customers)
EFFECTIVE 3.0% 3.8%
INCREASE
33

and Committee 2026
Finance 3, 2 80 of
Enterprise September Attachment 34 Commercial Electric Bill Comparison
Audit, Page
34

and Committee 2026 3, 2 80
Finance Enterprise September Attachment of 35 Proposed Commercial Electric Rates
Audit, Page
COMPONENT CURRENT PROPOSED CHANGE PRIOR
FORECAST
SYSTEM SERVICE Single Phase - $24.72 Single Phase - $29.72 $5.00 $5.00
CHARGE Three Phase - $30.74 Three Phase - $35.74
USAGE CHARGE Tier 1 - $0.06491 Tier 1 - $0.06686 3% 0%
SUMMER per kWh Tier 2 - $0.05109 Tier 2 - $0.05417 6% 5%
USAGE CHARGE Tier 1 - $0.05375 Tier 1 - $0.05536 3% 0%
WINTER per kWh Tier 2 - $0.04114 Tier 2 - $0.04319 5% 5%
MONTHLY BILL $478.36 $490.10 $11.74 $5.00
(Average Customers)
EFFECTIVE 2.5% 1.0%
INCREASE
35

and Committee 2026
Finance 3, 2 80 of
Enterprise September Attachment 36
Audit, Page
Gas
36

and Committee 2026
3, 2 80
Finance of
Enterprise September Attachment 37
Audit, Page
Increasing Operating Costs on the Gas Utility
$30
Millions
$25
$24.9M
$23.5M $23.7M $24.3M
$22.6M $23.1M
$20 $21.3M
$19.0M $19.6M
$17.8M
$15 $16.6M
$10
$5
$-
FY 21/22 FY 22/23 FY 23/24 FY 24/25 FY 25/26 FY 26/27 FY 27/28 FY 28/29 FY 29/30 FY 30/31 FY 31/32
Actuals Actuals Actuals Actuals Estimate Projected Forecast Forecast Forecast Forecast Forecast
37

and Committee 2026
3, 2 80
Finance of
Enterprise September Attachment 38
Audit, Page
Increasing Debt Service Costs on the Gas Utility
$25.0M
$23.1M
Millions $21.9M
$20.6M
$20.0M $19.6M $6.6M
$18.3M $5.5M
$17.3M $2.0M $4.4M
$16.3M $3.2M
$14.7M
$15.0M $14.1M
$12.6M
$10.0M $8.9M
$17.6M
$16.2M $16.4M $16.5M
$15.2M
$5.0M
$0.0M
FY21/22 FY22/23 FY23/24 FY24/25 FY25/26 FY26/27 FY27/28 FY28/29 FY29/30 FY30/31 FY31/32
Actual Actual Actual Actual Estimate Forecast Forecast Forecast Forecast Forecast Forecast
Existing Debt Service Projected Future Debt Service
38

and Committee 2026
Finance 3, 2 80 of
Audit, Enterprise September Attachment 39 Page
Southwest Gas Increase
April 2027 Rate Increase
• Approximately 10.69% monthly bill increase for average residential customers
• From ~$49 to ~$54 monthly
• $5.18 per month
39

and Finance Committee 2026 3, 2 80 of
Enterprise September Attachment 40 Total Residential Customer Natural Gas Supply Cost (Average Customer) –
Audit, Page
Southwest Gas vs COM
40

and Committee 2026
3, 2 80
Finance of
Enterprise September Attachment 41 Residential Gas Bill Comparison
Audit, Page
$100
$90
$80
$70
$60
Bill
$50
Monthly
$40
$30
$20
$10
$-
Small Average Large
Mesa - Proposed $26.30 $44.63 $75.96
SWG - Proposed $20.35 $48.31 $93.12
Mesa - Current $24.60 $42.28 $72.32
SWG - Current $19.15 $43.65 $82.91
41

and Committee 2026 3, 2 80
Finance Enterprise September Attachment of 42 Proposed Residential Gas Rates
Audit, Page
COMPONENT CURRENT PROPOSED CHANGE PRIOR
FORECAST
SYSTEM SERVICE CHARGE
SUMMER $17.31 $18.81 $1.50 $1.00
WINTER $20.24 $21.74
USAGE CHARGE Tier 1 - $0.7961 Tier 1 - $0.8319 4.5% 7%
SUMMER per therm Tier 2 - $0.4233 Tier 2 - $0.4488 6% 15%
USAGE CHARGE Tier 1 - $0.7961 Tier 1 - $0.8319 4.5% 7%
WINTER per therm Tier 2 - $1.0009 Tier 2 - $1.0609 6% 8%
MONTHLY BILL $42.28 $44.63 $2.35 $2.27
(Average Customers)
EFFECTIVE INCREASE 5.6% 5.4%
42

and Committee 2026
3, 2 80
Finance of
Enterprise September Attachment 43 Commercial Gas Bill Comparison
Audit, Page
$1,600
$1,400
$1,200
$1,000
Bill
$800
Monthly
$600
$400
$200
$-
Small Average Large
Mesa - Proposed $111.61 $487.68 $1,438.55
SWG - Proposed $109.54 $556.54 $1,392.52
Mesa - Current $107.46 $475.84 $1,405.53
SWG - Current $104.01 $513.56 $1,331.55
43

and Committee 2026 3, 2 80
Finance Enterprise September Attachment of 44 Proposed Commercial Gas Rates
Audit, Page
COMPONENT CURRENT PROPOSED CHANGE
SYSTEM SERVICE CHARGE
SUMMER $47.66 $50.66 $3
WINTER $57.34 $60.34
USAGE CHARGE Tier 1 - $0.6107 Tier 1 - $0.6290 3%
SUMMER per therm Tier 2 - $0.4584 Tier 2 - $0.4814 5%
USAGE CHARGE Tier 1 - $0.6614 Tier 1 - $0.6812 3%
WINTER per therm Tier 2 - $0.6623 Tier 2 - $0.6955 5%
MONTHLY BILL $475.84 $487.68 $11.84
(Average Customers)
EFFECTIVE INCREASE 2.5%
44

and Committee 2026 3, 2 80
Finance Enterprise September Attachment of 45
Audit, Page Manual Meter Reading Fee
• Manual Meter Reading Fee for non-AMI meters
• Staff trip to read meter, document, provide information to billing
• Fee recovers cost of non-standard service
• No charge to customers with AMI meter
• $60 per meter, per billing cycle
45

and Committee 2026 3, 2 80
Finance Enterprise September Attachment of 46
Audit, Page
Solid Wast e
Rat es Recommendat ions
Sheri Collins - Director

and Committee 2026
3, 2 80
Finance of
Enterprise September Attachment 47
Audit, Page Solid Waste Operating Costs
$80
Millions
$70
$63.4M
$60.1M $60.7M $61.8M
$59.2M
$60 $57.4M
$51.8M
$49.0M $49.5M
$50
$45.3M
$40.9M
$40
$30
$20
$10
$-
FY 21/22 FY 22/23 FY 23/24 FY 24/25 FY 25/26 FY 26/27 FY 27/28 FY 28/29 FY 29/30 FY 30/31 FY 31/32
Actuals Actuals Actuals Actuals Estimate Projected Forecast Forecast Forecast Forecast Forecast
47

and Committee 2026
Finance 3, 2 80 of
Enterprise September Attachment 48
Audit, Page MRF Recycling
48

and Committee 2026 3, 2 80
Finance Audit, Enterprise September Attachment of 49 Page Solid Waste Residential Rate
5.5% Proposed Increase
Residential Current Proposed Increase Proposed Total
90-Gallon Trash Barrel $34.99 $1.92 $36.91
49

and Committee 2026 3, 2 80
Finance Audit, Enterprise September Attachment of 50 Page Solid Waste Neighborhood Cleanup Program
Proposed Proposed
Current Increase Total
Mesa Green $1.00 $0.05 $1.05
and Clean Fee
50

and Committee 2026 3, 2 80
Finance Audit, Enterprise September Attachment of 51 Page Solid Waste
Total Residential Increase
Residential Current Proposed Increase Proposed Total
90-Gallon Trash Barrel $34.99 $1.92 $36.91
Mesa Green and Clean Fee $1.00 $0.05 $1.05
Total $35.99 $1.97 $37.96
51

and Committee 2026 3, 2 80
Finance Audit, Enterprise September Attachment of 52 Page Solid Waste Bulk Item Collection
Residential Current Proposed Increase Proposed Total
Bulk $31.00 $4.00 $35.00
52

and Committee 2026 3, 2 80
Finance Audit, Enterprise September Attachment of 53 Page Solid Waste Appliance Collection
Residential Current Proposed Increase Proposed Total
Appliance $19.00 $4.00 $23.00
53

and Committee 2026
Finance 3, 2 80 of
Audit, Enterprise September Attachment 54 Page Commercial Front Load Trash
6% Overall Rate Increase
• Increase base rate
• 6-yard trash bin increase from $127.48 to $138.50
• Increase Multi Bin Factor Discount
• 2YD, 3YD, 4YD from 36% to 40%
• 6YD from 31% to 35%
• 8YD from 28% to 31%
• Increase fee for out-of-zone collection from $33.00 to $35.00
54

and Committee 2026
Finance 3, 2 80 of
Audit, Enterprise September Attachment 55 Page Commercial Front Load Recycle
9% Rate Increase
• Increase base rate
• 6-yard bin increase from $107.87 to $117.57
55

and Committee 2026
Finance 3, 2 80 of
Audit, Enterprise September Attachment 56 Page Commercial Roll Off
6% Overall Rate Increase
• Increase tonnage rate to follow landfill increase
• Increase trash tonnage rate from $51.50 to $55.00
• Increase green waste tonnage rate from $59.82 to $63.32
• Increase haul fee by $5/$11/$12
• 15/20-yard roll off increase from $140 to $145
• 30-yard roll off increase from $150 to $161
• 40-yard roll off increase from $166 to $178
• $21.50 increase for a one-time trash and green waste
customer (30 yd)
56

and Committee 2026 3, 2 80
Finance Audit, Enterprise September Attachment of 57 Page Residential Overview
Residential Current Proposed Increase Proposed Total
90-Gallon Trash Barrel $34.99 $1.92 $36.91
Residential Current Proposed Increase Proposed Total
Bulk $31.00 $4.00 $35.00
Residential Current Proposed Increase Proposed Total
Appliance $19.00 $4.00 $23.00
Residential Current Proposed Increase Proposed Total
Mesa Green and Clean Fee $1.00 $0.05 $1.05
57

and Committee 2026 3, 2 80
Finance Audit, Enterprise September Attachment of 58 Page Commercial Overview
Proposed Proposed
Front Load Current Increase Total
6Yard Front Load Trash – 1x Week $127.48 $11.02 $138.50
6Yard Front Load Recycling – 1x Week $107.87 $9.70 $117.57
Proposed Proposed
Roll Off Current Increase Total
30Yard Rolloff Trash – 1x $454.50 $21.50 $476.00
30Yard Rolloff Green Waste - 1x $479.46 $21.50 $500.96
58

and Committee 2026
Finance 3, 2 80 of
Audit, Enterprise September Attachment 59 Page FY 26/27 Recommended Rate Adjustments
59

and Committee 2026
Finance 3, 2 80 of
Audit, Enterprise September Attachment 60 Page
Next Steps
September 10 - City Council Discussion of Utility Rates
September 28 - City Council Action on Notice of Intent
November 16 - Introduction of Utility Rate Ordinances
December 1 - City Council Action on Utility Rates
January 1, 2027 - Effective Date for Utility Rate Changes
60

and Committee 2026
3, 2 80
Finance of
Enterprise September Attachment 61
Audit, Page
61

and Committee 2026
3, 2 80
Finance of
Enterprise September Attachment 62
Audit, Page
62

and Committee 2026
Finance 3, 2 80 of
Audit, Enterprise September Attachment 63 Page Detail of Recommendations
Water Revenue Impact
Water Staff Recommendations Old Method Recommended Revenue
Difference
Residential Service Charge 7.0% 4.0% +$1,765,000
Residential Tiers 1 & 2 7.0% 3.5% +$1,414,000
Residential Tiers 3 & 4 7.0% 4.5% +$528,000
Multi-Unit Usage 7.0% 12.0% -$1,180,000
Non-Residential Service Charge 7.0% 4.0% +$502,000
Commercial Usage 7.0% 13.0% -$1,303,000
Commercial Landscape Usage 7.0% 15.0% -$2,205,000
Large Comm./Industrial Usage 7.0% 23.0% -$477,000
Excess Surcharge Tier 1 7.0% 13.0% -$257,000
Excess Surcharge Tier 2 7.0% 23.0% -$119,000
Landscape Excess Surcharge Tier 1 7.0% 15.0% -$202,000
Landscape Excess Surcharge Tier 2 7.0% 25.0% -$537,000
Interdepartmental 7.0% 3.5% +$216,000
63

and Committee 2026
Finance 3, 2 80 of
Audit, Enterprise September Attachment 64 Page Detail of Recommendations
Water Revenue Impact
64

and Committee 2026
Finance 3, 2 80 of
Audit, Enterprise September Attachment 65 Page Terms & Conditions Updates
• Clarify that account holders who receive City wastewater and solid waste
services will have the same name on file with their non-City water utility
provider
• Clarify that a monthly paper billing fee will be applied to customers that elect
to receive a paper bill
• Clarify that the customer of record is responsible for all charges for utility
services until the customer contacts the City directly to cancel service, or a
new customer establishes service at the property and responsibility it
transferred to the new customer
• Customers shall pay all applicable fees for each service connection, including
the Capacity Fees
65

and Committee 2026
Finance 3, 2 80 of
Audit, Enterprise September Attachment 66 Page Electric Terms & Conditions Updates
• Remove section that allows customers to provide a letter of credit for the
establishment of service
• Remove duplicated section on non-residential security deposits that is
already included in the Terms & Conditions
66

and Committee 2026
Finance 3, 2 80 of
Enterprise September Attachment 67
Audit, Page
Water Backup
67

and Committee 2026
3, 2 80
Finance of
Enterprise September Attachment 68 Residential Water Rate Adjustment and CPI Comparison
Audit, Page
Base Year - 2018
40%
35% 33.69%
32.12%
29.25%
30%
25% 22.88%
20%
15.66%
15%
10.19% 10.74%
10% 7.53%
4.92% 4.04%
5% 3.07%
1.51%
0.00% 0.00%
0%
2018 2019 2020 2021 2022 2023 2024 2025
CPI Residential Water Rate Adjustment (Typical Customer)
Source: BLS CPI-U (All Items), Phoenix-Mesa-Scottsdale; annual averages rebased to 2018 =100
68

and Committee 2026
Finance 3, 2 80 of
Enterprise September Attachment 69
Audit, Page Drought Commodity Charge
Drought Commodity Charge: During a declared water shortage, a Drought Commodity Charge will be assessed per 1,000
gallons of water consumption above 3,000 gallons per billing period in the amount on the Drought Commodity Charge
sheet. The Drought Commodity Charge shall become effective upon a) a shortage declaration for the Colorado River by any
authorized federal agency or authority or b) a shortage declaration for the Salt River or Verde River by the Salt River Project
or an authorized State agency and continue until all shortage declarations have been terminated. The Drought Commodity
Charge shall not be considered gross revenue for purposes of Mesa City Code Section 3-3-4(D).
69

and Committee 2026
Finance 3, 2 80 of
Audit, Enterprise September Attachment 70 Page
Mesa Gateway Airport Fire Protection Demand Charge
• Applies to facilities located in the North
General Aviation Area.
• Currently 12 customers on this rate.
• Rate was adjusted +30% in 2025; the first
time it had been adjusted in ten years.
• Another +30% adjustment was applied in
2026.
• One more +30% adjustment is
recommended for 2027.
• Part of a three-year plan to attain cost
recovery.
70

and Committee 2026
3, 2 80
Finance of
Enterprise September Attachment 71
Audit, Page
Residential and Commercial Bill Distribution
Residential Water Usage - Highest Point of Usage (by Account) Commercial Water Usage - Highest Point of Usage
Average Winter
(December 2025 - February Average Summer Overall
2026) (May 2026 - July 2026) (August 2025 - July 2026)
Percent Number Percent Number Percent Number
Kgals Tier
Accounts Accounts Accounts Accounts Accounts (rolling) Accounts (rolling)
0
1
0 32.47% 45,540 27.32% 36,353 33.16% 2,275
2
3
4 37.33% 2,562
5 1 31.24% 43,818 23.71% 30,595 40.85% 2,803
6 43.79% 3,004
7 46.50% 3,191
8 48.99% 3,361
9 51.07% 3,504
10 53.13% 3,646
2 28.77% 40,350 31.11% 42,479
11 54.99% 3,773
12 56.68% 3,889
13 58.25% 3,997
14 59.65% 4,093
15 60.93% 4,181
16 62.17% 4,266
17 63.27% 4,342
18 64.36% 4,416
19 65.39% 4,487
3 5.58% 7,829 11.80% 17,884
20 66.39% 4,555
21 67.32% 4,619
22 68.19% 4,679
23 69.00% 4,734
24 69.77% 4,787
>24 4 1.95% 2,730 6.06% 10,203 30.23% 2,074
Total 100% 140,268 100% 143,642 100% 6,861 71

and Committee 2026
Finance 3, 2 80 of
Enterprise September Attachment 72
Audit, Page FY25/26 Water Sales
3%
5%
15%
Residential 14,300,361 kgals 46%
Commercial 8,858,946 kgals 29%
Large Commercial 663,355 kgals 2% 2% 46%
Multi-unit Development 4,788,771 kgals 15%
Inderdepartmental 1,403,266 kgals 5%
All Other 885,397 kgals 3%
Total 30,900,096 kgals 100%
29%
Residential Commercial Large Commercial
Multi-Unit Inderdepartmental All Other
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Audit, Page FY25/26 Water Bills
3%
7%
Residential 1,739,801 bills 89.3%
Commercial 129,800 bills 6.7%
Large Commercial 106 bills 0.0%
Multi-unit Development 59,987 bills 3.1%
Inderdepartmental 14,303 bills 0.7%
All Other 3,965 bills 0.2%
Total 1,947,962 bills 100.0%
89%
Residential Commercial Large Commercial
Multi-unit Development Inderdepartmental All Other
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Enterprise September Attachment 74 Excess Water Surcharge
Audit, Page
Average Commercial Consumption
Commercial Customers - Average Consumption per Account:
FY22/23 FY23/24 FY24/25 FY25/26
Commercial Landscape (kgals/mo) 88.01 96.52 105.90 102.02
Rate Adjustment (usage charge adjustment) +7.5% +7.5% +10.5% +25.0%
Commercial General (kgals/mo) 44.14 46.36 48.19 49.02
Rate Adjustment (usage charge adjustment) +5.5% +5.0% +8.5% +20.0%
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Enterprise September Attachment 75 Affordable Utility Services
Audit, Page
High Water Burden – Senior Low Income
In the City of Mesa, the typical customer on the Senior Low Income Discount rate uses 3kgals/mo, the majority of whom also
maintain a winter water average of 2kgals/mo. As such:
- These customers only pay the service charge for their water (3kgals/mo are included in their water service charge).
- These customers only pay the service charge for their wastewater (2kgals/mo are included in their wastewater service
charge).
- These customers also receive 30 percent off their water service charge
Water and wastewater service charge: $622.32/yr (as proposed)
Income at four-and-a-half (4.5) percent threshold: $13,829/yr or $1,152/mo
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Fixed charge dilution is the equity concern
As more dwellings share one service charge, fixed revenue recovered per dwelling falls sharply.
Monthly fixed revenue per dwelling
Residential minimum bill $34.29
One 3/4” residential customer at 0–3 kgals.
Triplex service charge $18.18 The master-meter benefit grows with scale.
$54.55 shared across 3 units.
30-unit service charge $4.72
$141.70 shared across 30 units.
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The proposal narrows the gap —it does not eliminate it
Multi-unit customers still receive a master-meter benefit, especially as properties get larger.
Per-dwelling monthly bill at 6 kgals per unit
Remaining discount vs. Residential
Residential $46.50
3/4” residential bill at 6 kgals. Triplex $1.22 / unit ≈3%
Triplex MUD $45.28
Close to residential recovery while retaining a modest master-meter benefit. 30-unit $9.80 / unit ≈21%
30-unit MUD $36.70
Still below residential because one fixed charge is shared by 30 units.
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Audit, Page
Solid Waste Backup
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Audit, Enterprise September Attachment 79 Page Ratebook Language Recommendations
Cancellation Language:
Current Language Example: Customers must cancel a special pick-up prior to arrival of the collection vehicle at the address or a trip fee shall be assessed.
Proposed Language Example: If a customer needs to cancel a scheduled appointment, the customer must cancel no later than one business day (Monday through
Thursday) by 5:00 PM before the scheduled appointment. Customers who do not timely cancel will be assessed a trip fee.
Logic behind proposal: The reason for adjusting the language is to enhance customer service for residents by establishing clearer cancellation windows. This change
will allow us to backfill appointment openings more effectively, providing quicker service to individuals on the waiting list. It will also help recover the costs associated
with cancellations.
Barrel Delivery Charge Language:
Current Language Example: No current language around barrel delivery charges, there are costs associated with delivering barrels.
Proposed Language Example: Barrel deliveries will be assessed a delivery charge of $12.97 per barrel for new solid waste accounts or for Customer's request for
additional barrels.
Logic behind proposal: There is a cost to deliver additional barrels. Primary costs drivers are truck costs and employee costs.
Barrel Not Out Fee Language:
Current Language Example: No current language around barrel not out, there are costs associated with driving to a scheduled barrel change out.
Proposed Language Example: Barrels scheduled for exchange and/or removal that are not out for service upon City of Mesa arrival at the service address will be
assessed a $12.97 fee.
Logic behind proposal: There is a cost to drive to a resident's house to exchange or remove a barrel.
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