Peoria residents could expect a utility rate increase of more than 10% in 2024, according to a recent city council study session.
The jump reflects a number of significant economic changes over the years related to the pandemic, drought, rapid inflation, fuel, supply chain issues, and the slowdown in the housing market.
All these factors are impacting the cost recovery model and have rendered past comprehensive rate studies no longer viable, officials say.
So city officials have worked with consultants to update rate options.
Utility bills include water, wastewater, solid waste and stormwater costs.
In the coming months, the Peoria City Council will have final approval on the utility rates, effective at the beginning of 2024.
In the meantime, here is a look at the confluence of economic factors that have caused such a significant increase.
Water, wastewater cost drivers
The city’s water services department like the rest of the city departments have been plagued with high inflation since it began to increase in mid-2021, and then peak at 9.1% in June 2022. The annual inflation rate remains at its highest since the early 1980s, and the city continues to struggle.
This has led to significant cost increases to labor, electricity, construction, chemicals, supplies, parts and equipment.
Water Services Director Cape Powers said inflation impacts nearly everything the water department does.
Additionally, electricity is going up depending on the electrical schedule being used, so APS is looking to a 13% increase to plant power, he said.
“It’s chlorine, its all that stuff we use to treat water and wastewater, and some of those supplies have nearly doubled in cost in the last couple years. There’s also supplies, parts and equipment. Anybody who has bought a piece of wire knows how much that costs,” Powers said. “Some of these financial challenges are coming at us fairly quickly so you have to push things farther out into the CIP program, which also affects rates.”
Colorado River cuts also affect everything the department does and will play into customers’ rate increases, Powers said.
Peoria has not been significantly affected by the Central Arizona Project cuts, but Powers said that will change soon. Peoria’s CAP allocation could be cut by 40% or more in 2024. So the city needs to prepare for future shortages, Powers said.
Other challenges include aging infrastructure and community growth, with numerous capital improvement projects requested, including water plant expansions.
Powers said the department will need at least seven new employees in the coming budget to address all these issues.
There are also increased wholesale water costs, Powers said.
Peoria and Glendale share operational costs of the Pyramid Peak water plant, which at about 24 million gallons per day, treats most of the city’s water. Powers said he anticipates about a $700,000 cost increase from last year.
He added regulatory and fee costs have risen as much as three-fold.
“Getting CAP water to our doors has gone up approximately $1 million a year over the last four or five years, and we expect that trend to continue or accelerate,” Powers said “We expect the cost to be $1.4 million for next fiscal year.”
Public works’ solid waste cost drivers
Solid waste services through the public works department are also part of utility costs.
Public Works Director Jay Davies said Peoria’s fleet of 60 dump trucks has been affected by the microchip shortage for around two years, as well as inflation, heightened cost for drivers, and the increasingly high cost of operating such a fleet.
Historically, the city replaces garbage trucks about every five years, but because of recent costs the city is trying to extend that to seven years. Turnaround time for new trucks has increased as well. It used to be six to nine months, but Davies said it now takes as long as two years from ordering a truck to receiving it.
The wear and tear a garbage truck experiences is significant, Davies said, with an average of 140,000 miles driven per month, as well as getting about three miles to the gallon on tires that need to be replaced about every 5,000 miles.
Tire expenditures have risen 6% or about $15,000 in the past couple years, Davies said.
Refuse collection vehicles are inefficient and expensive, and the fleet part of this equation cannot be underestimated, he added.
“Imagine if you needed a new set of tires every time you had your oil changed. That’s really what we are talking about. The reason that has to happen — those trucks are very heavy, they are very long, they are turning in cul-de-sacs, they are driving at landfills that are filled with goodness knows what. Those tires, they don’t last very long.”
Disposal fees have also risen, both for recycling and for landfills, which are up by an average of 10%.
Much of the Valley’s recyclables, including Peoria’s, are processed and sorted at the city of Phoenix North Gateway Materials Recovery Facility. They are then sent to be recycled hundreds of miles out of state. Processing costs for Peoria have gone up 43% at this facility, Davies said.
Recycling costs for polyethylene terephthalate, called PET, have also risen. PET is the name of a clear, strong, lightweight and 100% recyclable plastic that comes from such items as soda and water bottles.
PET costs have been trending upward, with an increase of about 60% over the last quarter, from $7.50 to just over $12 a pound.
Lastly, Davies said mixed paper is a healthy portion of Peoria’s curbside pickup, which garnered the city $68 per ton in January of last year and got the city only $1 per ton in January of this year.
That is perhaps the ugliest trend line of all, he said.
“That has been quite a drop, considering it is the bulk of what we collect curbside,” Davies said
He added with so many expenses going up with solid waste and recycling, “The numbers make clear that our current rate model is feeling a lot of pressure,” he said.
Philip Haldiman can be reached at phaldiman@iniusa.org, or on Twitter @philiphaldiman. We’d like to invite our readers to submit their civil comments, pro or con, on this issue. Email AZOpinions@iniusa.org.
Meet Philip Haldiman is an award-winning journalist who most recently took first place for investigative reporting in 2023 from Arizona Newspapers Association. He joined Independent Newsmedia, Inc., USA, in 2015, covering Sun City West his first year. Since 2016, he has covered the city of Peoria. Prior to coming to INI, he was a reporter with The Arizona Republic for seven years, covering numerous cities throughout the Valley. Before that, he was a freelance writer.
Community: Haldiman spearheads the Peoria Independent Hometown Heroes Awards program, honoring local individuals and businesses that give back to the community. He has hosted local candidate forums over the years and is a member of the Society of Professional Journalists. Haldiman also served as a member of the Journalism Program Community Advisory Board at Glendale Community College. Outside journalism, Haldiman served as a member of the city of Peoria Complete Count Committee for the Census, 2019-2020. Lastly, he has served as a member of his HOA governing board since 2021.
Education: Arizona State University with a BA in Journalism and Mass Communications and a BA in Theater.
Random Fact: Haldiman is a fourth-generation Arizonan as well as wrote and produced an autobiographical comic book about his time spent in Hollywood and his life as a cult film star.
Hobbies: He enjoys hiking Arizona’s mountainous landscapes and is currently working on a play for the stage.
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