Councilors ask for more work on alternatives for rate increase expected to take effect next summer

By Morgan Rothborne, Ashland.news 

It’s not a question of if water rates will go up, it’s a question of how much. Ashland City Council reviewed a study of the finances of its water system with an eye for how much rates will need to rise in the face of various coming changes during its Monday evening study session. 

The current draft of the water cost of service and rate analysis projects potential rate hikes as high as 15% over the next biennium budget period, July 2025 to June 2027. New rates won’t be set until closer to the likely effective date of July 1 of next year, said Josiah Close of HDR Engineering, the city’s contractor for the study. 

The study examined the cost to provide water service to the city in detail, including itemized costs for fiscal year 2025 such as uniforms — $2,795 for employees of the water treatment plant; chemicals, $248,063 for the treatment plant; and medical and laboratory expenses for the water conservation division, $248,063, according to the draft staff report. 

Once costs of staff and equipment are factored in, the utility has to consider the expenses of maintenance and capital improvement projects, Close said. The study is projecting rate changes over the next five years due to the costs of projects Ashland has planned, such as the replacement of the water treatment plant and repairs to Hosler Dam. 

Councilor Bob Kaplan asked a question as Close clicked through his Powerpoint slideshow.

“Without taking on the debt, if I’m looking at this right, if we do nothing relative to current rates, it goes negative?” he asked. 

Ashland Public Works Director Scott Fleury confirmed that, due to inflation, and not including any debt from capital improvement projects like the new water treatment plant, the city would still need to raise its rates to fully fund the utility. 

Kaplan inquired if the city should have raised rates sooner, noting the previous increase in rates was in 2019. 

Close responded that, while it is usually preferable to raise rates slowly and avoid “rate shock,” he has been encountering other municipal clients in a similar position due to the upset of the pandemic forestalling work such as water rate studies. 

Councilor Gina DuQuenne asked Fleury to speak to the relative cost of Ashland’s water.

“I saw that Ashland has the highest water rate in Oregon, and I don’t know why that is,” she said. 

Comparing water systems is hard because it’s comparing apples to oranges, Fleury said. Medford has lower rates on average than Ashland, but Medford also has springs, essentially 20 million gallons of water a day coming in “that they just chlorinate and send into the system,” for a portion of the year without needing to power on their treatment plant. Medford also has income from partner cities and other users of the water commission’s water sharing costs. 

Medford also doesn’t have a dam and its accompanying regulatory aspects, Fleury said. Even so, Medford is also going to increase their rates 15% starting in January. 

Talent and Phoenix come closer to Ashland’s rates, but don’t have their own treatment plant and purchase water from Medford. The expansion of Medford’s water treatment plant will also raise the rates of for those small cities. 

Having a source of water of its own is a strength in terms of resilience and mitigating emergencies, Close said, but this does come with an additional cost. 

Kaplan asked about drought and water usage in the future. Fleury responded that conversation is coming as the peak months of water usage were abnormal this year. 

“I think that’s a policy discussion that City Council should trend toward as we go into this biennium budget … I know this year I was surprised at the usage in October. We had days in the 90s, almost 100s. Multiple days. Definitely in my time here the demand was higher than I’ve ever seen it,” Fleury said. 

Mayor Tonya Graham summarized direction to city staff after every member of council finished with questions: Staff should return to council with the next iteration of this study, including information such as extending the peak months of water usage, identifying ways to encourage conservation, reviewing the potential for elevation-driven tiers of cost and to explore the low income assistance program and to consider the future of the food and beverage tax. 

“Which ones have I missed?” she said. 

Councilor Paula Hyatt stated council would also like to see the comparison to neighboring communities and Councilor Jeff Dahle said council also wants to see alternative rate structures developed to “tell the full story of why.”

Email Ashland.news reporter Morgan Rothborne at [email protected].

Related stories:

Potential water rate hike schedule up for review at Monday’s council study session (Dec. 1)

Uphill battle: Financing for plan to relocate water treatment plant faces ballot test (Oct. 28)