Phoenix Water Rates to Rise for Heavy Users as City Braces for 30% River Cut
Starting in January, a new surcharge of $2.10 per unit will apply to water consumption above set thresholds, impacting roughly 16% of residential customers.
By Lorenzo Marshall ·
The City of Phoenix is preparing to activate Stage 2 of its Drought Management Plan in January, a move that introduces a temporary surcharge for high water users and mandates specific conservation targets. The action responds to new federal guidelines that will sharply reduce Colorado River deliveries to the Lower Basin states.
Under the plan, residential customers will pay $2.10 for every unit of water consumed above 20 units per month. Commercial users face the same rate for consumption exceeding 300 units, while industrial users pay for usage above 15,000 units. One unit is defined as 748 gallons. City officials estimate this structure will affect approximately 16% of residential bills, 7% of commercial bills, and 1% of industrial bills, leaving the majority of customers without a surcharge.
Water Services Director Brandy Kelso stated that the city has spent decades preparing for these challenges. She noted that while investments have positioned Phoenix well, federal cuts require further local action. Mayor Kate Gallego emphasized that the city is stepping up its own conservation efforts and asking residents and businesses to participate in reducing demand.
The plan requires voluntary water use reductions of 5% for residents and businesses, while city departments must cut usage by 10%. In addition to these reductions, the city is expanding financial incentives for conservation. The grass-removal incentive will double from $2 to $4 per square foot. The smart irrigation controller incentive will rise from $75 to $150, and a new leak-repair incentive of $100 per year will be introduced.
The financial impact of the surcharge is projected to generate approximately $40 million. This revenue will fund conservation programs and help develop additional water supplies. The city aims to offset the reduced river flow by utilizing renewable backup supplies, stored one-time use water, groundwater recovery infrastructure, and regional water partnerships.
New federal operating guidelines will reduce Colorado River deliveries to the Lower Basin by 1.25 million acre-feet annually in 2027 and 2028. Arizona is expected to absorb 760,000 acre-feet of those reductions under a proposed sharing agreement. Since Phoenix currently derives about 40% of its drinking water from the Colorado River, its deliveries from that source could decline by roughly 30%.
Water Resources Management Advisor Max Wilson cautioned that while stored water provides flexibility, these reserves are not unlimited. He said the city must manage them carefully while developing new supplies. The city is advancing the Pure Water Phoenix project, which includes purification facilities at Cave Creek Road, North Gateway, and 91st Avenue, and is participating in regional efforts to expand Verde River storage.
Phoenix has operated under Stage 1, or Water Alert, since June 2022. Stage 2, designated as Water Warning, is activated when normal supplies become insufficient. It does not interrupt water service but requires additional resources and demand-reduction measures. Free sand for sandbags is currently available at nine city parks due to forecasted storms.
