Frequently Asked Questions About Differential Water Rates
Updated May 7, 2021
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What is a differential rate?
A differential rate refers to different sets of rates imposed upon different customer categories. In this case, the proposed differential rates would apply to Tucson Water customers located in unincorporated Pima County.
Why is this being considered?
Various known inequities exist between city and county customers:
- Infrastructure use: The 29% of Tucson Water customers in unincorporated Pima County utilize 36% of the utility’s infrastructure assets
- Resource use: A significant portion of water used by county customers is lost to septic systems or retained by the county, rather than being returned to the city as a reclaimed water resource
- Water conservation: County customers use 43% more water on average than city customers
Additionally, the Tucson region loses $40M - $50M in State Shared Revenues every year due to the high unincorporated area population. A differential rate structure is one means of encouraging annexation or incorporation.
If you haven’t done a differential rate in the past, why is the City considering it now?
Historically, all Tucson Water customers have paid the same rates. Implementing a differential rate structure at this time would begin to address the inequities between the customer categories outlined above.
I heard charging a differential rate is illegal, is it?
No. The use of differential water rates is legal in Arizona and the practice has been upheld by the Arizona Supreme Court. It is not uncommon for a community to charge a higher rate to those residing outside of their jurisdiction. For example, the City of Phoenix charges a differential rate for water customers they serve in unincorporated Maricopa County at 50% above their standard city rate.
Is it normal for a municipal utility to have a differential rate for customers not in the jurisdiction?
Yes. The use of differential rates is commonplace among many Arizona cities operating water utilities that serve customers outside of their jurisdictions.
What is the amount of difference a county customer would pay under a differential rate scenario?
The Mayor and Council are currently reviewing options that include a flat rate increase of 10%, 20%, 30%, 40%, or 50%; or sliding rate increases up to 50% based upon monthly water usage. The Mayor and Council will review all options presented during the comment period and a final decision will be made after the June 8 public hearing.
What would the increase in funding be used for?
No decision has been made. The Mayor and Council will seek guidance from stakeholders and constituents during the comment period. Potential uses of additional funding could include:
- Improved infrastructure resiliency
- Water bill assistance programs
- Climate resiliency investment
- Paying down existing utility debt
Will my water service change or be different if a differential rate is adopted for county customers?
Regardless of outcome, the level and quality of water service provided by Tucson Water will not be affected by the decision to implement differential rates.
If I have a hard time affording my water bill now, how will I be able to pay the differential rate? Will there be any assistance for low-income people?
A monthly utility bill discount of up to 75% is available to all Tucson Water customers who qualify based on income requirements and household size. For more information on eligibility, visit https://www.tucsonaz.gov/water/low-income-assistance-program.