In 2010, the Town of Marana may establish the first groundwater resource acquisition and development fee in its water rate structure.
Revenues from that proposed fee, up for public hearing Jan. 5, would be used to "isolate and pay for all the costs of water resource acquisition," town water rate consultant Dan Jackson of Economists.com told the town council last week.
Jackson suggested the groundwater acquisition and development fee begin at 30 cents per 1,000 gallons of water consumed by a customer. Oro Valley has such a fee, at 75 cents per 1,000 gallons, Jackson said.
"Resource acquisition is expensive, and needs to be shown to the rate payers," said Jackson, who recommends the new fee go from 30 cents to 40 cents in 2011. The "separate line item" on Marana water bills would serve as "an important tool to help rate payers understand what those costs are.
"The town must acquire water resources to replenish its supply, which is becoming more expensive," Jackson said. "Water resource acquisition and development costs are the primary reasons for rate adjustments."
Jackson, the town's rate consultant since 2007, is also recommending elimination of a credit on the first 1,000 gallons of water used by customers beginning in 2010. Right now, there is no consumption charge for the first 1,000 gallons used. More water utilities are waiving that credit, he said; the average residential consumer uses about 7,000 gallons of water a month.
Marana would have no other water rate increase in 2010, Jackson is recommending. There would be a proposed increase in rates for 2011.
If the changes are implemented by the town council, the resident who uses 5,000 gallons of water a month would see charges for that service go from $24.41 a month now, to $28.23 a month in 2010, and $29.43 in 2011.
"Most residential rate payers will experience a $3 to $5 increase in their monthly bills in 2010," Jackson said. "All you're trying to do is cover your costs."
Jackson reviewed the town's current rate structure, with increasing charges for higher consumption. "The idea of this rate structure is to promote conservation," Jackson said.
Marana's rate for a residential consumer using 10,000 gallons of water a month is $36.02, compared with $42.52 statewide and $46.06 in "most directly comparable," neighboring Oro Valley. Among water utilities with annual revenues of $1 million to $5 million, the average charge for that 10,000-gallon consumer is $38.37 per month. For Arizona utilities with 5,000 accounts, similar in size to Marana's 5,186 accounts, the average for that 10,000-gallon user is $39.02 per month.
Marana's particular complications include "a high level of growth," and an "equally sudden drop-off in the rate of growth." Jackson said the assumptions in his model include a continued flattening of growth, "with fewer new accounts in future years."
The model assumes no immediate acquisition of Tucson Water accounts that are within the Town of Marana. "If you do acquire, that may fairly substantially change the rate numbers," Jackson said.
It also assumes operating cost increases of 3 to 5 percent annually, and issuance of $4.48 million in bonded debt for acquisition of Cortaro Marana Irrigation District assets and completion of Twin Peaks and Camino de Manana water lines, "both critical" to the town water system's future, he said.
Water is "the oil of the 21st century," Jackson said, and its scarcity requires "policy, strategic and financial decisions.
The proposal would come before the council for a public hearing on Jan. 5.
A Town of Marana proposal would:
• Implement a first-ever, 30 cents per gallon water acquisition and development fee;
• Waive an existing 1,000-gallon credit for all users.
Most rate payers would see a $3 to $5 monthly increase on their bills, a consultant said.
A formal public hearing on water rate adjustments would be held Tuesday, Jan. 5.