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After floating the possibility of a smaller increase earlier this year, San Antonio Water System officials have returned to their original proposal of raising customers’ rates by nearly 10 percent in 2020.
In a $929.9 million budget released Wednesday, the municipally owned water and sewer utility suggested raising rates by 9.9 percent, the largest increase since at least 2016.
The change would bring the average customer’s monthly bill from $68.60 to $75.17. For year-to-year comparisons, SAWS assumes its average customer uses 7,092 gallons of water per month and disposes of 5,668 gallons of wastewater per month.
The increases are in large part to start making payments for SAWS’ 140-mile Vista Ridge pipeline, along with a record-breaking nearly $609 million capital budget for sewer and water delivery improvements. SAWS must begin making payments of up to $220,000 per day on Vista Ridge water when it begins flowing in April 2020.
Unlike previous rate increases, SAWS will not need San Antonio City Council approval to raise rates next year because of a City Council vote authorizing the rate increases in 2015.
The utility will likely implement the full 9.9-percent rate increases on SAWS customers to pay for Vista Ridge, even though SAWS officials said earlier this year that they were considering seeking a lower bill hike. In May, City Council members approved impact fees charged to developers that would lead SAWS to collect $383 million from developers over 10 years to offset the $2.8 billion Vista Ridge project.
“That’s the maximum amount,” SAWS Chief Financial Officer Doug Evanson told the Council at the time. “I don’t think we’re going to come in with a figure near that figure.”
But in an interview during SAWS’ September board meeting, Evanson said that because of lower-than-expected revenues so far in 2019, SAWS needs the full 9.9 percent.
The utility is down about $15 million in revenue compared to projections as of July because its customers are using less water per person and sending less wastewater down the drain than before, Evanson said. He showed an updated 2019 budget that indicates a nearly $9 million shortfall compared to forecasts by the end of the year.
“Even when it’s dry, we’re seeing reduced usage,” Evanson said. “It’s great from a conservation perspective, great from a water supply perspective, but it is challenging from a revenue perspective.”
Asked what SAWS would do with the $383 million in impact fees it collects for Vista Ridge instead of giving customers a break on rates, Evanson said SAWS will “offset other water supply spending,” such as by paying down debt.
On the expenditure side, SAWS is approaching the most expensive period of its 10-year consent decree with federal regulators to fix its undersized and leaky sewage network. Of the $609 million budgeted for capital improvements next year, $413 million are for sewer projects, including an extensive sewer tunnel under Southwest Military Drive.
SAWS is also budgeting for sending more of its revenue to the City – 4 percent instead of the 2.7 percent the utility has contributed since 1992. City leaders made the request earlier as part of their $2.9 billion budget for next fiscal year.
Evanson said at the meeting that SAWS will not likely need another water supply project through 2040. SAWS officials are proposing no bill increases in 2021, followed by increases of 6.2 percent in 2022, 5.3 percent in 2023, and 6.3 percent in 2024.
SAWS officials were not able to say Wednesday whether the board would vote on the budget at its October or November meeting.
The rate increases come as SAWS embarks on another study aimed at potentially restructuring its rates, something it does roughly every five years. On Wednesday, SAWS officials announced the 20 nominees to its Rate Advisory Committee, a group charged with looking under the utility’s hood to understand how it funds its operations.
The committee will meet 10 times from this month to May 2020, said Mary Bailey, SAWS vice president for customer engagement and strategic initiatives. The first meeting is Sept. 24.