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Home My WebLink About11/18/2025 09.B. Domestic and Irrigation Water Rate Study Presentation !, !:::;5 • •••:,"?..1 � F - BUSINESS OF THE CITY COUNCIL YAKIMA, WASHINGTON AGENDA STATEMENT Item No. 9.B. For Meeting of: November 18, 2025 ITEM TITLE: Domestic and Irrigation Water Rate Study Presentation SUBMITTED BY: Scott Schafer, Director of Public Works *Mike Shane, Water/Irrigation Manager SUMMARY EXPLANATION: The City's Water/Irrigation Division and the FCS Group have prepared a presentation for the Domestic Water Rate Design. The presentation outlines a proposed "block rate" structure for single family water consumption, providing for reduced rates at lower consumption blocks, with increasing tiered rates as consumption increases. Such a rate structure could help encourage water conservation amongst City customers. FCS Group has also prepared proposed rate adjustments for the City's Irrigation Water utility for 2026- 2031. This is to ensure both operations and capital projects are properly funded such as the Nelson Diversion project. In developing and setting rates, it is important to base them on actual costs to ensure the rate structure for both Operational and Capital funds properly supports the cost of providing this essential service, but is also fair and equitable to the users. ITEM BUDGETED: N/A STRATEGIC PRIORITY 24-25: A Resilient Yakima RECOMMENDATION: No action is needed. The Domestic and Irrigation Water Rate Study presentation is to inform the City Council of proposed rate adjustments to the Domestic Water rate structure, as well as updates the Irrigation Operating and Capital rates. Rates will be considered for approval at a future City Council meeting. ATTACHMENTS: Yakima Water Utilities Presentation - 20251118 for Council.pptx 421 Domestic and Irrigation Water .. ,....., Rate Study Findings ...1.••••••• . • ....• 1PISIN •ID SO 0 •.. i.• • ••• • -I.• ji - Ad•OrAit • . ^ • . . •••••• ..- f• - 0, . ••••lo '-•0 0.• • ..•• • --.- . i 1 1. .•r-•- ---,_ 0•••• • .r..° -.- r•dtkri. —• ••••n, _ • * • I 1' 'I i •rk-'''. ." ,: • •; -—, -Ir.' '.4 •11.1. I: 11 4 ie •••• • 1, % . - - 1"1" .. ' • . -7voirr• - , ,..... / 1 -"AlWagie. 7- -m, 'k I I . .- rr It.....*A - Or- - --A. - . -.7-11.•• .7 111 i i • i . , •• IL I I • ._ ••:•••fm . 'i/ • .. •••••••• • 111111r2=1"-"'Mi.,. ," . 4 ra 4 1 i i ''i .1 '.....- ... ... — . In_ ...• - ." . "Ir I I •1 .,•' ,.. • i:,•4 •.,. IMMIIIIIIIII"" 4.!.'I 14.4. , ':•'•0,•'A a v ';:4.i...II 72 1 r.r;a -'4 . • •-— NI/'•gri•:.•' •4' . •••••• , • ._ .. ..•--, ---.. ...Imam ' IIII.te . • 1 ii 1 a .4 • Ili. 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I a lropikrilli 0= ..11 . _ .;----- _ ,.. 41,... . 0:04,.. , spili fire,-, Is ..4 --- , .., .-, - . r •••••>F C S _ _ Slide 3 424 .;4City's Adopted• Domestic Water Rate Schedule Water Service Charge (ready-to-serve charges per two-month period) Jan. 1, 2025 Jan. 1, 2026 Jan. 1, 2027 Jan. 1, 2028 Jan. 1, 2029 3/4" $28.07 $29.89 $31.83 $33.26 $34.76 *; Fixed charge: scaled by meter size 1" 35.42 37.72 40.17 41.98 43.87 Standard practice with water utilities 1 1/2" 55.11 58.69 62.50 65.31 68.25 2" 78.76 83.88 89.33 93.35 97.55 No changes recommended 3" 134.09 142.81 152.09 158.93 166.08 4" 213.09 226.94 241.69 252.57 263.94 6" 410.40 437.08 465.49 486.44 508.33 8" 799.97 851.97 907.35 948.18 990.85 10" 1,199.98 1,277.98 1,361.05 1,422.30 1,486.30 12" 1,752.75 1,866.68 1,988.01 2,077.47 2,170.96 Unit of Consumption (UOC) (., Consumption charge: single rate per UOC Consistent rate regardless of customer class Jan. 1, 2025 Jan. 1, 2026 Jan. 1, 2027 Jan. 1, 2028 Jan. 1, 2029 UOC $2.32 $2.47 $2.63 $2.75 $2.87 Proposed Single Family changes for consideration Note:UOC = unit of consumption = I ccf(748 gallons) •:,>FCS Slide 4 425 •;> Single Family Rate Design Options • Scenario 1 : Status Quo Continue with the current rate structure adopted • Scenario 2: Block Rates Charges different rates base on amount of water used » Encourages water conservation from high users Usage » Promotes affordability for life-line water use —Scenari Scenario » Industry trend moving towards this rate structure approach Both scenarios designed to be revenue neutral >FCs Slide 5 426 •> Scenario 2A - /4Single Family Block Rates: sets rates based on observed customer statistics 10 ccf bimonthly = winter average usage (56% of bills) 50 ccf bimonthly = usage above this represents - 10% of total Single Family usage 3/4" Fixed 0-10 ccf 11-50 ccf Over 50 ccf Charge for 2026 Charge All Use ccf Bimonthly Bimonthly Bimonthly Scenario Both Current Sample Sample Sample Scenario 1: Status Quo $29.89 $2.47 Scenario 2A: Block Rate $29.89 $2.08 $2.78 $3.47 Note:usage adjustments after 2026 would follow adopted rate increase percentages Slide 6 427 •;> Single Family Bill Comparison By Usage $250 - 7,500 Larger water users receive higher bills than the $20o uniform rate structure to - - ' 6,000 •romote conservation m $150 ' 4,500 cn co Block Usage Rate m $1003,000 Block 1 0-10 $2.08 Block 2 11 -50 $2.78 $50 Block 3 Over 50 $3.47 $o - 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 54 56 58 60 62 64 66 68 70 72 74 Usage (ccf) Bills —2025 Rates 2026 ATB — — 2026 Block Rates ':>FCS Note:Bill assumes a 3/"meter for the fixed charge component Slide 7 428 •;•) Single Family Bill Comparison By Usage $140 7,000 Previous graphic zoomed in to show middle 90% bills $120 • Bottom 5% use 0-1 ccf 6,000 • Top 5% use 36+ ccf $100 ' 5,000 $80 4,000 Block Usage Rate E $60 At lower usage levels, g Block 1 0-10 $2.08 2026 sample block rates are closer to 2025 Block 2 11 -50 $2.78 $40 rates due to lower first Block 3 Over 50 $3.47 block charges $20 $0 - 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 Usage (ccf) Bills —2025 Rates 2026 ATB — — 2026 Block Rates ':• FCS-0 . Note:Bill assumes a 3/"meter for the fixed charge component Slide 8 429 •> Scenario 2B - /4Single Family Block Rates: sets rates based on observed customer statistics 10 ccf = winter average usage (56% of bills) » 40 ccf = usage above this threshold represents —13% of total Single Family usage Sends price signals for water conservation sooner - Increases variable in revenue collection from higher users 3 " Fixed 0-10 ccf 11-40 ccf Over 40 ccf Charge for 2026 Charge All Use ccf Bimonthly Bimonthly Bimonthly Scenario I. Both Current Sample Sample Sample Scenario 1: Status Quo $29.89 $2.47 Scenario 2B: Block Rate $29.89 $2.07 $2.76 $3.45 Note:usage adjustments after 2026 would follow adopted rate increase percentages Slide 9 430 • •) Single FamilyBill Comparison By Usage ;• $250 7,500 i Larger water users receive higher bills than the $20o uniform rate structure to , - ' 6,000 •romote conservation m $150 4,500 i • N • • Block Usage Rate m $1003,000 Block 1 0-10 $2.07 Block 2 11 -40 $2.76 $50 Block 3 Over 40 $3.45 $o - 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 54 56 58 60 62 64 66 68 70 72 74 Usage (ccf) Bills —2025 Rates 2026 ATB — — 2026 Block Rates ':;>FCS Note:Bill assumes a 3/"meter for the fixed charge component Slide 10 431 •;>• Single Family Bill Comparison By Usage $140 7,000 Previous graphic zoomed in to show middle 90% bills $120 • Bottom 5% use 0-1 ccf 6,000 • Top 5% use 36+ ccf � ' $100 .... ' 5,000 c' $80 4,000 ' ' Block Usage Rate v, m o E $60 At lower usage levels, Block 1 0-10 $2.07 C, 2026 sample block rates are closer to 2025 Block 2 11 -40 $2.76 $40 rates due to lower first block charges Block 3 Over 40 $3.45 $20 1,000 $0 - 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 Usage (ccf) Bills —2025 Rates 2026 ATB — — 2026 Block Rates ':• FCS-0 . Note:Bill assumes a 3/"meter for the fixed charge component Slide 11 432 • •;•) Scenario Comparison by Usage • $300 7,500 $250 6,250 ® e i s $200 5,000 m . >, o cn $150 .. ' 3,750 N O s m E r $100 ► ' 2,500 $50 1,250 $0 - 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 54 56 58 60 62 64 66 68 70 72 74 Usage (ccf) Bills —2025 Rates -—2026 Status Quo Scenario 2A — — Scenario 2B ':;>FCS Note:Bill assumes a 3/"meter for the fixed charge component Slide 12 433 4 Sam le Bills by Usage and Scenario p • Bimonthly Usage 2025 Adopted 2026 Status Quo 2026 Scenario 2A 2026 Scenario 2B Rate 0 $28.07 $29.89 $29.89 $29.89 10 $51.27 $54.60 $50.73 $50.59 30 $97.67 $104.02 $106.31 $105.77 50 $144.07 $153.43 $161 .88 $167.86 75 $202.07 $215.20 $248.72 $254.08 100 $260.07 $276.97 $335.55 $340.31 >FCs Slide 13 434 ...I. :7,7- - - e--..-- 0.--.....: • _ .. 4:4-:-•;•:•.- '.4. —- - . • . . . . . . . . . . - A •7- .11,116-"n., ..., • '..I.A.Plheir; 4..-----, I. -- ' to • ... 4... — -::: ripAiditH •••••••w -.... x • •d-Pd _ ' " := .t.; •, ,er itlo , . 010 A. Of*. ' Ni ' ..... -011.A416.i0--'- ' 7A11. ••••••-- • .. ..... I _ , •,_. ....• ', i .1 I.1 . Tei • - A. ......... — -O..... I -.... , - • 771 ' "0 II . '. 11 , • . . f. ....__ -- , 1 -`.... . •.. , .1 . .. . ....—.....-,.1.• r, -. ... I s . -, - ...., es.z_ ... ..: NIL --.....- ... - . ..r, Irrigation Water Utility ,.,0 , 'f 4 .. ft ... ... .. .....:_-etioNi•,<--- . 1 ._ .111.. . • ... • , - _ ...„ . • , .. .. -, . -, ,--.....-..-.....k..-.U. •-7.- - . , . , _. - •k 1,t T• , r „ il I 1 : 7 I : • ... .- kr . f ) _ .. _ _. , ' -- - - a*Sr, 1 1 :4_ — ... : 1 4116.4. II En . 441\, I' ,;..-c I 6,.. 4 •4A 1—.1 .._... d1.4••• i -, 1 I • li L L L i I 111", • •=.% --, • -1-1- N im-F-Icsorruntruiliorlillf _ .;----- ,.. . ii,„. . gizA,.. , spilagroo.„ .. ., . . . r •••••>F CS _ _ Slide 14 435 • •;•) Irrigation Rate Structure Category/Description 2025 2026 Irrigation Operation and maintenance charge x total square footage (annual fee, billed $0.0261 S0.0269 in 6 payments) Capital improvement program charge x total square footage S0.0197 S0.0206 (annual fee, billed in 6 payments) 2019-2025 • Two components based on total square footage Adjustment Operations & Maintenance (O&M): recovers ongoing operating cost O&M: 9.2% CIP: 13.2%° Capital Improvement Program (CIP): recovers capital costs and debt Inflation: 22.6% • Annual cost calculated with above rates and billed over six billing periods Slide 15 436 • •;•) Introduction to UtilityRate Making Utility rates are set to recover cost of providing service All utilities are self-supporting • Operating costs (regular / ongoing) Hypothetical Example » Employee salaries and benefits O&M Charge » Supplies and materials >� Routine inspections and maintenance • Fleet replacement contributions Interfund charges for services • Capital costs » Infrastructure replacement Year 1 Year 2 Year 3 Year 4 Year 5 CIP Charge » Facility upgrades ❑ Operating ❑ Capital » Debt service from previous capital projects Slide 16 437 ♦ ♦;♦) StudyData and Assumptions • Study Foundation Fund Balance 2025 starting fund balances, validated with staff input Operating Costs 2024 actuals + 2025-2026 budget Capital Expenditures City estimates on annual project spending related to Nelson Dam Debt Repayment City provided debt repayment schedules Revenues Validated customer billing statistics Forecast Assumptions General Cost Inflation WA State Revenue and Economic Forecast Council, CPI, Staff input (3.0%) Construction Cost 20-City ENR Construction Cost Index (4.0%) Wages Based on City staff input (4.5%) Benefits Employment Cost Index 5-year average, Staff input (5.0%) City Utility Taxes No utility tax on irrigation revenue Customer Growth Yakima Water System Plan data (0.3% per year) ':,)FC Slide 17 438 -_ r _ a _ _ _r • 7T► ' 'f 11 • Operations and �, yo � � Maintenance Charge � �. -T 6. 0 Wye.. 1 -, - X - ._, -_rl.w� .vim .... ..i , -- Aga,-, '�i _ • _ _ - - -ram a+.v- i i L L L i _ >FCS - Slide 18 439 ♦ ♦;♦) O&M Revenue and Expense Forecast - Current Rates ♦ ,, $3.5 2031 Deficiency: 0 2025 Deficiency: ($650,000) f $3.0 ($90,000) $2.5 F $2.0 milliFilil $1.5 $1.0 $0.5 $- 2025 2026 2027 2028 2029 2030 2031 Operating & Maintenance —Revenue @ 2025 Rates ':,>FC5 Slide 19 440 •;♦) O&M Fund Balance Target Fund Purpose Target 2025 Starting Balance Weather variations in Minimum: timing of collecting 60 days $540,000 Irrigation O&M revenues and paying (-82 days of O&M) operating expenses Target: 90 days •:;>FCS y Slide 20 441 •;•) Fund Balance (without rate adjustments) • „, $1.0 0 $0.5 2025 2026 2027 20 I 203 $(0.5) $(1.0) Without rate adjustment, $(1.5) Irrigation O&M fund balance is negative by end of 2027 $(2.0) $(2.5) No Rate Adjustment — 60 day of O&M • • • 90 day of O&M CS Slide 21 442 ... ) Rate Adjustment Scenarios Scenario 2026* 2027 2028 2029 2030 2031 4 1 -Year 15.50% 3.00% 3.00% 3.00% 3.00% 3.00% 2-Years 9.50% 9.50% 3.00% 3.00% 3.00% 3.00% 3-Years 8.25% 6.50% 6.50% 3.00% 3.00% 3.00% • O&M fund balance allows for utility to phase in rates options • All scenarios reach and then maintain revenue sufficiency • 2026 rate increase would replace currently adopted rate >Fcs , Slide 22 443 •;•) EndingFund Balance by Scenario 0 $1.6 Funds in excess of 90 day $1.4 target can be transferred to ca.ital needs $1.2 $1.0 $0.8 IM •... ... .... $0.6 $0.4 OM Mal MED 1 =MD i IIMMI MI 1$0.2 $- 2025 2026 2027 2028 2029 2030 2031 1-Year 2-Years 1 1 3-Years — 60 day of O&M ••• 90 day of O&M >FCS Slide 23 444 —_ r • ..�1 sa . 1 Capital Improvement - N, -..� Program Charge �•�� 1co II �i IEEE 11 .�►, i ' +'CFCs - .o• 445 Phase 2A • 5.4m is 2025-2026 spending•'•� Irrigation Ca ital Needs $ OOkto be funded by utility • v, $5.0 Phase 2B 0 2 $4.5 Grant dependent, would only proceed if funded $4.0 100% through grants $3.5 Phase 2C T $3.0 Grant dependent, would $2.5 !II. only proceed if funded 100% through grants $2.0 $1.5 $1.0 - $0.5 $- 2025 2026 2027 2028 Phase 2A Phase 2B Phase 2C >FCS Slide 25 446 • •••) CIP Charge Revenue and Expense Forecast - Current Rates • „, $3.0 2025 Deficiency: $960,000 0 Covered by fund balance 2 $2 5 Current Rates allow for additional capital spending of $200k - $1 .45m from years I 2026-2028 as interfund loans are repaid $2.0 $1.5 $1.0MOSVOINKt Isotwomilf $0.5cnovitAN,oft Nactimmit - 2025 2026 2027 2028 mInterfund City Charges maDebt Service Utility Funded Nelson Dam Capital . :.Available for Additional Capital :'>' FCS Slide 26 Revenue @ 2025 Rates 447 •;•) Rate Adjustment Scenarios • Rates forecasted to be sufficient at current levels Maintain adopted increase in 2026, followed by no increases through forecast period $1 .5m annually available for capital from 2028-2031 • City has adopted a 4.57% increase for 2026 Maintain the adopted rate and increasing with inflation allows for additional capital to be completed within the utility $1 .7m annually available for capital from 2028-2031 Scenario 2026 2027 2028 2029 2030 2031 No Adjustment Beyond 2026 4.57% 0.00% 0.00% 0.00% 0.00% 0.00% Adopted and Inflation 4.57% 3.00% 3.00% 3.00% 3.00% 3.00% Slide 27 448 • _.� - - —_ A y a K+r. 1 .m.� �' — ^ I. -- -i I, rtltf . 411• Ni �- Illiff! . A. �x intiorTT I s Irrigation Bill Impacts yr - P. , k ti, -, _ 1 �._. 1.- ' r r, 1 I 1. i : -- ,,sr, i l _ - -ram a+.v- 1 • IEEE i _ ':;>FCS slide 28 449 • ) Rate Forecast Op per tionTotal Square Foot • O&M Rate Scenario 2026 11 ;: 027 2028 2029 2030 2031 1 -Year $0.0301 $0.0310 $0.0320 $0.0329 $0.0339 $0.0349 2-Years $0.0286 $0.0313 $0.0322 $0.0332 $0.0342 $0.0352 3-Years $0.0283 $0.0301 $0.0320 $0.0330 $0.0340 $0.0350 CIP Rate Scenario 2026 2027 2028 2029 2030 2031 No Adjustment $0.0206 $0.0206 $0.0206 $0.0206 $0.0206 $0.0206 Adopted and Inflation $0.0206 $0.0212 $0.0219 $0.0225 $0.0232 $0.0239 Slide 29 450 4 Sample Bimonthly Bill - 8,000 Total Square Feet • O&M Rate Scenario 2025 2026 2027 2028 I 2029 2030 2031 1 -Year $34.80 $40.19 $41.40 $42.64 $43.92 $45.24 $46.60 2-Years $34.80 $38.11 $41.73 $42.98 $44.27 $45.60 $46.96 3-Years $34.80 $37.67 $40.12 $42.73 $44.01 $45.33 $46.69 CIP Rate Scenario 2025 2026 2027 2028 2029 2030 2031 No Adjustment $27.47 $27.47 $27.47 $27.47 $27.47 $27.47 $27.47 Adopted and Inflation $26.27 $27.47 $28.29 $29.14 $30.01 $30.91 $31 .84 Slide 30 451 4 Sample Bimonthly Bill - 8,000 Total Square Feet • Sample Total Bill 2025 2026 2027 2028 I 2029 2030 2031 O&M - 2-Year $34.80 $38.11 $41.73 $42.98 $44.27 $45.60 $46.96 CIP - Adopted + 3% $26.27 $27.47 $28.29 $29.14 $30.01 $30.91 $31 .84 Total $61.07 $65.58 $70.02 $72.12 $74.28 $76.51 $78.80 $ Change $4.51 $4.44 $2. 10 $2. 16 $2.23 $2.29 % Change 7.4% 6.8% 3.0% 3.0% 3.0% 3.0% •:>FCS Slide 31 452 ♦;♦) 2025 BimonthlyRate Survey - 8,000 TSF • Pasco J Columbia Irrigation District Yakima Tieton Irrigation District I Spokane - Model Irrigation District 18 Richland Badger Mountain Irrigation District Yakima Kennewick Irrigation District - Pressurized $- $10 $20 $30 $40 $50 $70 $80 FCS Slide 32 453 • -.. F — • __ r •- — riffvlir! _ ii,, , I.1,1' '''W , Inil II. I _ r •' "iI • 't om'! y- ..�. i � wF �! err 7 s '..I -- ,TA_ r Su m m a r y - _.,0 n � — -i , - _ 1 1 1 iLLL I ! ^ i Y r •+.. 6Q,,.1 = +e _,,rr" •:,>FCs _ - - - Slide 33 454 4 Summary Domestic Water - Rate Design Irrigation Water - Revenue Needs Status Quo O&M Charge No changes to adopted rates 1 -Year Adjustment 15.5% in 2026; 3% annually 2-Year Adjustment • Scenario 2A 9.5% in 2026-27; 3% annually » Block rates 3-Year Adjustment 8.25% in 2026, 6.5% in 2027-28; 3% » Highest block starts at 50 ccf annually CIP Charge • Scenario 2B No rate adjustment beyond 2026 • Block rates Maintain adopted 2026 rate and » Highest block starts at 40 ccf inflationary increase from 2027-2031 Slide 34 455 Thank you ! Questions? www.fcsgroup.com • FCS a Bowman company 456