Water utility builds rate hikes into 2009 budget

In a preview of what he is likely to present to Council on Thursday, Austin Water Utility Director Greg Meszaros outlined the highlights of next year’s $405 million water utility budget at last night’s Water and Wastewater Commission meeting.

Those highlights included a 7 percent rate increase that is tied closely to the utility’s increased expenditures; decommissioning of the Green Water Treatment Plant in a month; wrapping up the federally mandated Austin Clean Water Treatment Program next spring; and early encouraging results on water conservation efforts.

The increase in water rates has been anticipated. In a comparison of monthly residential bills for comparable cities, the average Austin homeowner lands squarely in the middle of the pack at $59.32 a month. On one end of the scale is El Paso, at $32.95 per month, with Seattle at the other end at $93.67 per month.

The proposed 7 percent combined utility rate increase – 9.7 percent on water rates and 4.5 percent on wastewater rates – will cost the average Austin residential customer another $4.25 per month, Meszaros said. That is based on the use of 8,500 gallons of water and 5,000 gallons of wastewater each month.

“Costs are going up, whether it’s chemicals, power, fuel or health insurance,” Meszaros said after the meeting. “We’re also doing a lot of investment in our system, so we have a lot of commitment to infrastructure. So, really, it’s a combination of both the capital side and the maintenance and operations issues.”

The water utility may also take steps to lower fees for 3,400 of the city’s lowest-income customers. The Council will consider water rates as part of the budget Council approves in September. A public hearing on the utility rates is scheduled for August 28.

Expenses in the new budget show an ongoing commitment to capital expenditures, including Water Treatment Plant 4 and a slight uptick in employees, to 1,058. The five-year Capital Improvement Plan shows a total of $1.4 billion in expenditures, with a third of the water expenditures going to WTP 4

According to a pie chart Meszaros shared with the commission, about 58 percent of the $1.4 billion in expenditures will be new construction. The 42 percent balance, $623 million, will be dedicated to rehabilitation of the current system.

“In a community like Austin, you’re going to see more investment in new infrastructure,” Meszaros said. “I would say this is a mix you might expect. We may be done with our Clean Water program, but it doesn’t mean we should stop investing in our current system. And we have a substantial capital program, which we only expect to continue.”

Just because the $400 million Austin Clean Water Program is ending does not mean the city needs to take a break from upkeep of the current infrastructure, Meszaros said. The budget includes major rehabilitation efforts in the Central Business District and West Campus, as well as a $42 million commitment to a reclaimed water system for the University of Texas and $13 million for the decommissioning and demolition of the Green Water Treatment Plant.

Major wastewater projects in this year’s budget will include the $31 million to finish out the Austin Clean Water Program, which is expected to lead to the Environmental Protection Agency lifting its order against Austin. Other expenditures include $214 million in line rehabilitation in areas such as the Central Business District, Seaholm, Onion Creek and West Campus. Another $94 million will be used for wastewater plant improvements at Walnut Creek and SAR Hornsby Bend.

The water utility also has launched its once-a-decade cost of service update. The update will consider how to divvy up the cost of water service among residential and commercial customers. Major issues will include recommendations from the water conservation task force; a possible individual class for large-volume customers; and possibly moving all customer classes to cost of service.

Right now, the rate system subsidizes the residential customer by about 10 percent, a cost that is passed on to the industrial and commercial customers. Results of the update are not expected to go to Council until next January, Meszaros said.

It is too early to get a trend line on the new water conservation ordinance, Meszaros said, but he noted that early numbers show overall decreased system water usage, despite the hot dry summer. At the typical highs, usage is around 240 million gallons per day, Meszaros said. This summer, the system has rarely broken 210 million gallons and shows usage trends that indicate people are following the new mandatory watering schedule.