2024 Utility Rate Study | City of Tempe, AZ

Listen

The City of Tempe’s Public Works Department is responsible for providing effective water, wastewater, stormwater and solid waste services to the community. All costs associated with delivering these services are met through direct customer fees which fund the Water and Wastewater Enterprise Fund and the Solid Waste Enterprise Fund.

The city establishes its customer rates using a biennial rate study that assesses the full costs for delivering services as well as the revenue required to maintain the utility’s financial stability. Rate adjustments are then recommended to address inflationary and other short-term budgetary factors, support long-term viability, provide resources for infrastructure maintenance and replacement, and align costs with the values and priorities of the City Council and community.

Frequently Asked Questions

What services do water and wastewater rates, fees and charges currently fund?

Tempe’s water and wastewater rates, fees and charges are used to provide clean and safe drinking water, collect wastewater for treatment, and replace critical infrastructure. In addition to those primary functions, Tempe’s utility rates also support water resources management including drought management and planning, water conservation including efficiency education and incentives, regulatory compliance with hundreds of local, state and federal requirements, stormwater program management, and more. For all services, visit the Water Utilities webpage.

How do Tempe’s utility rates compare to neighboring municipalities?

How does Tempe’s utility funding work?

What is a rate study? What is a financial model update? How often are they conducted?

The city reviews water and wastewater utility rates and solid waste rates every year to ensure that charges stay current and to prevent large gaps between revenue and expenses. Every two years, the city conducts an extensive water, wastewater, stormwater and solid waste rate study that forecasts revenue and expenses for the next 10 years. This study serves as a snapshot in time of projected future costs to the utility based on past water use and current costs. During non-rate study years, the city conducts a financial model update that reviews the impact of inflation and other trends.

During a rate study, consultants work with city staff to identify the total amount of money a utility must collect from customers to pay all costs associated with providing the services. This process includes identifying all current and estimated future operations, maintenance, programmatic and capital costs over a 10-year period. These costs are examined carefully and are broken down by specific processes or services, so that a relationship can be created between the cost of the service and the user of the service. At the end of the rate study, a report is produced that provides the data, analysis and a recommended rate structure. The goal of the rate study is to identify if any adjustments to rates, fees and charges are needed to maintain the financial stability of the utility.

What Tempe City Council Performance Measures are considered in a rate study?

The 2024 Utility Rate Study will align with and support the following City of Tempe Performance Measures:

1.13 Safe Drinking Water: Achieve or exceed Safe Drinking Water Act standards for water quality.

2.02 Customer Service Satisfaction: Achieve satisfaction ratings of “Very Satisfied” or “Satisfied” with the “Quality of Customer Service” greater than or equal to the top 10% of the national benchmark cities as measured by the Community Survey.

4.03 Water Conservation: Achieve or exceed water conservation targets for Single-Family, Multifamily and Landscape customer class water use as measured by gallons per capita per day.

4.04 Solid Waste Landfill Diversion: Achieve or exceed Council adopted Solid Waste landfill diversion targets.

4.16 Groundwater Supply: Achieve groundwater production capacity to meet the projected average for future daily demand.

5.01 Quality of Business Services: Achieve ratings of “Very Satisfied” or “Satisfied” with the “overall level and quality of business services provided by the City of Tempe” greater than or equal to 90% as measured by the Business Survey.

Visit the City of Tempe's Performance Measures webpage for more information.

Does the city make a profit on water and solid waste utility services because they are an enterprise fund?

No. Net revenue, if achieved, remains in the Water and Wastewater and Solid Waste funds to offset future inflation and forecasted capital expenses, mitigate rate increases and maintain sufficient reserves in accordance with the city’s water and wastewater and solid waste fund balance policies. The fund balance is essential to make sure that the Utility will be able to provide uninterrupted service.

Fund balance policies are as follows:

Water/Wastewater

The City shall maintain an unrestricted retained earnings reserve in the Water/Wastewater Enterprise Fund of no less than 25% of current-year operating revenues, plus 2% of the gross book value of the tangible assets of the City's water/wastewater system.

Solid Waste

The City shall maintain an unrestricted retained earning reserve in the Solid Waste Enterprise Fund of no less than 15% of current-year operating revenues.

When and how are water, wastewater and solid waste rates adopted?

Pursuant to A.R.S. Section 9-511.01, water and wastewater rate adjustments must be adopted by the Tempe City Council. The Tempe City Council will vote to adopt a Notice of Intention (NOI) to adjust water and wastewater rates and set a date for a public hearing on the proposed adjustment at least 60 days after the adoption of the NOI. A copy of the NOI will be published one time in a newspaper at least 20 days before the public hearing date. The city will file a written report with information about the new rates with the City Clerk’s Office and post the report on the city website at least 30 days before the public hearing and adoption of rates.

Pursuant to A.R.S. Section 9-499.15, a written report supporting a stormwater / environmental fee will be posted on Tempe’s website at least 60 days before Council votes to approve or disapprove the fee. An NOI to adopt a stormwater / environmental fee will be posted to Tempe’s website and distributed through Tempe’s social media accounts at least 15 days before Council votes.

Are there assistance programs for residents who are experiencing challenges paying for water, wastewater solid waste and stormwater services?

City of Tempe staff, nonprofits and local businesses work together to help those experiencing financial difficulties, including staying current on their utility bill.

Resources and tips for lowering your bill

Avoid extra fees by calling Tempe Customer Services at 480-350-8361 before your water service is suspended.

Arrange a payment plan. Call Tempe at 480-350-8361 and one of our representatives will work with you.

Schedule a free water consultation with Tempe. Tempe water professionals can help you identify ways to conserve water use and check for leaks, which could potentially lower your bill. Learn more: tempe.gov/WaterConsult
Rebates are available. Make water-efficient home upgrades and get money back. See rebate options at tempe.gov/rebates.

Help with your utilities and other bills may be available through local agencies.

Who can I call if I have a question about my utility bill or am having difficulty paying my bill?

Listen