Salt Lake City mulls water rate changes, drought surcharge

SALT LAKE CITY — Those who use Salt Lake City utilities for water will likely face another service fee increase this year, while heavy water users could also have to pay an additional “drought surcharge,” too, as the department that distributes the water deals with rising costs and other issues.

No changes have been made yet but Salt Lake City Public Utilities officials outlined the fee increase in their priorities for the 2024 fiscal year in a meeting with the Salt Lake City Council on Tuesday.

The proposal calls for:

• An 18% increase in water utility fees, an 15% increase in sewer fees and a 10% increase in stormwater fees. This is a planned increase that helps pay for a new $800 million water treatment plant that was needed to keep up with new federal regulations.
• A surcharge for residents who use more than 30 hundred cubic feet (about 22,440 gallons of water) per month, and an even higher rate for those using more than 70 hundred cubic feet (52,360 gallons) per month during the irrigation season, April through October. This would result in an additional fee of $0.66 to $1.17 per hundred cubic feet. Based on past usage, it could result in as much as $5 million in new fee collections.

Laura Briefer, director of Salt Lake City Public Utilities, said the department is also planning on launching a study to redesign the city’s water fee structure in the near future.

Handling a water ‘conundrum’

The primary fee increases would help repay project debts and handle some of the “inflationary pressures” impacting the cost of maintaining the services that the department provides, Briefer explained. The department supplies water to Utah’s capital city, as well as Cottonwood Heights, Holladay, Millcreek, and some of the county’s unincorporated areas, which would also see water rate changes.

At the same time, the department suffered “significant” revenue losses because of the drought. The department was able to get residents and businesses to save billions of gallons of water over the past two years, which was great for water conservation but it also resulted in a revenue shortfall totaling nearly $30 million.

That’s less money for projects to improve the district’s aging infrastructure.

“It’s a conundrum, honestly, for us,” Briefer told the council, explaining that the proposed surcharge could recoup some of those losses or dissuade users from overconsuming. “We, obviously, aren’t trying to recover $30 million in a drought surcharge and we’ve never done this as a city, so we wanted to take baby steps on that.”

Most residents won’t reach the surcharge threshold. However, the proposed 18% increase would raise the cost of water by $3.93 to $4.54 per month for minimal and low water users, according to Salt Lake City Public Utilities projections. The other proposed fee increases would tack on another $2.83 to $4.79 a month, for at least residents in Salt Lake City.

If approved by city leaders, the fee changes and surcharge would go into effect in July. A department spokesperson clarified with KSL.com that users will see any payment changes beginning with their July consumption moving forward, should it be approved.

But some members of the Salt Lake City Council are a bit wary of the proposed increases. Though they acknowledge the predicament that the department is in, they want to make sure any rate increases are fair for the district’s residents and businesses.

“The work that you’re doing is undeniable but what’s also undeniable is that so many people who live in our neighborhoods — maybe people who have never watered a lawn before, who are living in multiplexes and things — are not getting 15-18% a year increases to their budget yet they are having to account for that,” said Salt Lake City Council Vice Chairwoman Victoria Petro-Eschler. “This is becoming a real inflection point now for people.”

Salt Lake City Councilman Alejandro Puy added that he’s heard from businesses who are getting uneasy about rising costs. More money could also be put into utility cost assistance programs as both the city and the department figure out a long-term solution to balance water consumption and cost.

This issue underscores the need for a new rate structure, Briefer responded. She points out that the department plans to study a new water rate structure in the coming year, which could piece together a plan that’s “adequate” for all users and covers the department’s fixed costs.

She pointed out that the department updates its rate structure on a fairly regular basis, though the last one occurred during the 2017-18 fiscal year — before the current drought began and usage patterns changed.

What a new structure would look like or when it will be implemented will be determined after the study is completed. While this year’s record snowpack has immensely helped Utah’s drought situation, Briefer reminded the council that it’s an issue that will eventually return.

“We’re still in a drought and one year of good snowpack like this year may not — we may not exit from the drought,” she said. “We want to be cognizant that we’re going to be asking people for people to conserve but the rates have to be designed in a way that we don’t have significant impacts, particularly to the water utility, because those costs are fixed for the most part.”

Other notable budget priorities (so far)

The proposed changes are a few of the first budget priorities Salt Lake City departments have given the City Council ahead of the 2024 fiscal year, which begins in July. The council will begin to compile the final budget in May and June. It settled on a record $425.5 million budget last year.

Salt Lake City library and airport officials also presented their budget priorities on Tuesday.

Airport officials said they are requesting to build new parking spots on Terminal Drive. Designing of the $60.8 million project would begin in July and construction could begin as early as 2025. Library officials said their top priorities include employee retention and recruiting.

Salt Lake City Mayor Erin Mendenhall is expected to unveil her budget priorities on May 2; however, it’s up to the city council to approve the final budget. They have until June 30 to sort out all the details before the new fiscal year begins.