The previous Water Cost of Service Rate Analysis was performed in 2017 and resulted in five years of fixed rate increases followed by no increases in 2022 and 2023. During the last two years those rates did not recover the actual cost to provide service. Projected operating costs and necessary investments in capital improvements continue to exceed the revenue generated from current rates in 2024 and beyond. Rate increases are necessary for:
- Operations and Maintenance – Cover rising costs of water supply, chemicals, supplies, parts, equipment, fuel, electricity, labor, insurance, services, and other operating costs,
- Annual Contributions to Capital Improvements (CIP) – Increase annual transfers to the CIP fund from $6M to $8M by 2028. This is ongoing funding to replace aging pipelines and other water systems facilities.
- Hennessey Water Treatment Plant Upgrades – Typical design life of a treatment plant is 40 years and Hennessey is 42 years old. It is one of the City’s primary treatment plants and is critical to reliable water service. Construction of major upgrades to the plant are scheduled for 2028-2033. A $100M bond issuance in 2027 is needed to support these improvements. Rates must cover this new annual debt service of $7.2M per year.