Director Lorelei McPhee presented an enterprise fund health check and a proposed multi‑year rate‑structure adjustment to the Meridian City Council on Nov. 12, saying the city’s utilities currently have among the lowest monthly rates in the Treasure Valley but that the water fund in particular needs revenue adjustments to remain solvent over a multi‑year horizon. "We are the lowest rates in the Treasure Valley by a lot," McPhee said, but added that modeled projections show the water fund will require changes to remain balanced.

McPhee summarized a 2024 cost‑of‑service study that found the city’s current methodology is legally defensible and predictive but recommended adjusting how costs are allocated between base (fixed) charges and use‑based charges. She said current allocations place roughly 29% of water costs on the base when the study estimates true base costs near 73%; for wastewater the city currently places 23% on the base versus a recommended ~27%.

To address the imbalance, staff recommended a phased plan (presented as the “9‑4‑3‑1” approach in slides) that increases the base share gradually across water and wastewater to better align each fund’s revenues and long‑term needs. In model runs staff showed a 10‑year application of that approach would collect roughly the right amounts for each fund while keeping annual customer impacts modest: McPhee said the proposal equates to about a 2.6% average customer increase in the first year and an average monthly change of about $1.66 for the typical customer; staff also said modeled cumulative annual impacts remained under about 3.5% per year in their scenario runs.

McPhee offered options and tradeoffs: a straight 3% across‑the‑board increase (lower near‑term impact but insufficient to correct the water fund imbalance over time), a phased multi‑year shift (staff recommendation), or a one‑time larger increase (e.g., ~9% to water and ~1% to wastewater) that would secure five‑year solvency but have a larger immediate customer impact. She told council staff would publish communications on utility bills, hold a public hearing in mid‑December, and, if approved later, implement changes with an effective date of Jan. 1.

Council reaction: Several council members (Overton, Little Roberts, Taylor) signaled support for the recommended phased approach as cautious and manageable. Mayor Simonson voiced concern for households that made previous investments to reduce use (for example, solar or surface‑water customers), asking whether shifting more costs to base fees would undercut the rewards of those investments; McPhee acknowledged the concern and noted that staff can track usage by customer class and measure impacts over time, and that many usage‑sensitive incentives would remain because a large share of bills would still be based on usage under the proposed plan.

What happens next: Staff recommended proceeding with public outreach, utility‑bill notices and a public hearing in mid‑December; council input at this meeting was advisory, with no formal rate vote recorded.