(Seguin) — Utility customers in the city of Seguin will notice slight increases in their water, wastewater and electric bills next year. In recent years, the city has conducted rate studies on both the water/wastewater and electrical services. The idea is to make sure that each service pays for itself. The sewer service fees were of particular interest this year, because the city has embarked on a plan to create a centralized sewer system at a cost of $184 million. The plan calls for decommissioning the Walnut Branch sewer plant, and greatly expanding the existing sanitary sewer plant, located east of town along Geronimo Creek.
Dan Jackson, of Willdan Financial Services, conducted the water/wastewater rate study on behalf of the city. He says the city is in a good position to finance the wastewater expansion project. He says the study shows that it can be done without big rate increases for existing sewer customers. Jackson says this is a big project that will have a positive impact on the city’s future.
“Bottom line, it is going to be a real game changer for the city, but it’s also going to be very expensive. It’s a $184 million project. That’s a lot of debt that you are going to be issuing in order to fund this project. Normally, when you think of $184 million in debt, you think, ‘oh my God! How are we going to pay for that? Our rates are going to have to go through the roof in order to pay for that’. Well, guess what? They are not and the primary reason that they are not is that you have undergone some very, very prudent financial management over the last decade and you have also made some very difficult decisions in the past. You have made the decision to adjust your rates and to ensure that your utility is financially healthy. But doing that, that is given you the ability to absorb this game changing new project at a minimal impact to your rate payers,” said Jackson.
Jackson says existing customers will not have to bear the financial burden of this project alone. In fact, he says the expansion will help to bring even more growth to the city, and that growth will help to pay down that debt.
“The other benefit of this project is that it is going to bring in a lot of new accounts. It’s going to lead to a lot of growth. It’s going to lead to economic development in this city. It’s going to make the city a better place. It’s going to make the city more prosperous, economically and financially. Those new accounts are going to offset a significant portion of your costs,” said Jackson.
The council has followed the projections of the rate study over the last few years, which has allowed the city to keep its rates at a level that not allow supports the system, but also allows the city to be looking towards future projects, like the expansion of the Geronimo Creek Wastewater Treatment Plant. Jackson says that he was again recommending that the city adopt the small increase that was already built into the plan for next year.
“Over the last couple of years, we have projected and predicted to the city that it will require a series of two percent annual water rate adjustments in order to continue to fund its operations. We believe that that rate plan continues to be effective and that the Walnut Branch and Geronimo Creek Project will not impact it. So, we are recommending a two percent rate adjustment for the year beginning in October of 2020. That’s the same plan that we have recommended in prior years. We also recommend a seven percent wastewater rate adjustment. That was, again, the same rate adjustment we recommended last year, and it was the same rate adjustment that we projected was going to be needed the year before that,” said Jackson.
Jackson says the water and sewer rates will go up next year, but he says it should not place an unfair burden on the current rate payers in Seguin.
“Your average residential rate payer uses somewhere between five and 10,000 gallons of water and sewer service a month. If you use 5,000 gallons a month, you pay $88.32 for that. If you use 10,000 gallons, you pay $122. Under this rate plan, the average bill will go up $4 to $5 a month this year and subsequent years, we project it will go up $2 to $3 a month. Now think about what you are getting in return for that. You are getting $184 million of investment in the future of the city of Seguin. These are assets that are not only going to serve you. They are going to serve your children, your grandchildren and maybe even your great grandchildren as well. It is going to increase the economic development of the city and so while it’s never easy to ask rate payers to pay more, what is really happening is the money is being reinvested in the future of the city,” said Jackson.
The city’s sewer service area is expanding, which is not the case for its water or electrical services, which are both surrounded by other utility providers. Jackson says there will likely come a time when the city has more sewer customers than it does water customers, because it can now further expand its capacity and its ability to provide sewer services well beyond the existing city limits.
On the electric utility side, the city has another small increase planned for next year. Assistant City Manager Rick Cortes says the changes will largely be a wash for many residential electric customers.
“On the residential side, we are going to have some slight adjustments. On the customer charge, it is going to go from $12 to $14.50 this next year and it will be applicable on Oct. 1. However, we are actually reducing the PCRF (power cost recovery factor) for residential customers so on an average bill with 1,000 kilowatt hours used, the bill is going to be, currently, they pay $112.13 but for 1,000 kilowatt hours and next year, it will still be $112. 13 so there’s no real change to residential customers. Now, the customers’ charge change but the PCRF has been adjusted to take care of that increase,” said Cortez.
Cortes says none of the electrical rate changes are big, and that’s also true for the city’s commercial and industrial customers.
“Commercial is going to be the same thing. It’s only to be a slight increase on the overall bill and it’s going to be about 72 cents on 1,384 kilowatt hours used. Large power, there is going to be a slight decrease of 20 cents and industrial users, there’s going to be a decrease and a slight increase depending on primary or industrial charges, so I mean the charges, the increases, were we do have them are minimal. Residential impacts are going to minimal. There is not going to be any residential impact,” said Cortez.
The utility rate changes were all presented during last Tuesday’s meeting of the Seguin City Council. The council voted to accept all of the recommended changes, as part of a first reading of the ordinances that spell out utility rates. A second and final reading of the ordinances will also need to be approved during the council’s next meeting.