Coldwater BPU approves modest water and wastewater rate increases after financial review

The City of Coldwater Board of Public Utilities on Wednesday approved proposed rate adjustments for water and wastewater that the board’s consultant said are intended to stabilize operating income, cash reserves and debt-coverage ratios ahead of planned capital work.

Dawn Lund, vice president of Utility Financial Solutions, told the board her firm recommends a 3.9% annual adjustment for water and a 3.5% adjustment for wastewater beginning in fiscal 2026 to “stabilize that operating income” and maintain a stronger cash balance ahead of future capital and debt issuance. "If we did nothing in the water utility for rate adjustments, the utility would operate at losses by 2030," Lund said during her presentation.

The consultant presented five‑year financial projections showing operating income targets and an operating cash balance the firm recommends be held between roughly $2 million and $3 million for water; Lund also reported the wastewater fund currently holds a more robust cash balance and faces a potential large capital borrowing need in the 2025–2030 window. "We're trying to smooth out that operating income," Lund said, explaining the rationale for modest, multi-year increases rather than a single large hike.

Under the proposed water design, the fixed customer charge for a 5/8‑inch residential meter would move from $18.50 to $19.50; commodity tiers would change modestly (first tier from $2.60 to $2.68 per unit, second tier from $2.28 to $2.35). Lund said the average residential customer using about 5,000 gallons would see a bill increase of roughly $1.40 under the 3.9% water adjustment. For wastewater, the board heard a proposal that would hold the residential fixed customer charge at about $29.90 while increasing the variable (commodity) rate from about $3.52 to $3.75; the typical 5,000‑gallon customer would see an average increase of about $1.15 under the 3.5% wastewater adjustment.

Board members and staff framed the increases as preparation for planned capital work and potential bond issuance. Lund said the wastewater forecast includes a potential $30 million project she modeled conservatively, and she recommended strengthening debt coverage before issuing new bonds. Carmen Cardenas, assistant director of finance for the city and BPU, told the board the budget summary already reflected the proposed water and wastewater increases and that refining depreciation entries did not materially change cash‑flow projections.

The board voted to accept the rate changes and forward them to the City Council for final approval (voice vote; motion carried). The action was recorded as resolution 25‑48 and will proceed to the council as part of the fiscal schedule for implementation later in the year.

The board and staff discussed public outreach following council approval; staff said they plan a public information program and an FAQ sheet to explain the reasons for the adjustments and the timing of implementation.

The board’s decisions were presented as part of the BPU’s larger financial planning effort to preserve reserve levels, meet typical bond covenant targets and avoid sharply higher single‑year rate increases in the future.