Portsmouth officials outline FY26 water, sewer budgets and proposed rate increases to shore up capital needs

City officials presented the proposed FY26 budgets for Portsmouth’s water and sewer enterprise funds at the council work session Wednesday, saying the plans include rate increases intended to stabilize finances ahead of major capital work and regulatory requirements.

The proposed water budget is $15,000,000 — a $1,000,000 increase year over year — and staff said the resulting change to most residential bills would be “not more than $2.25 per month.” City staff proposed a sewer budget of $27,200,000, an increase of $1,600,000, with an expected residential impact “not more than $3.45 a month” for most customers.

“The water and sewer is not supported by tax funds. It is solely a self supported effort,” said Peter Rice, director of public works, explaining the enterprise-fund model that relies on fees rather than property-tax support.

Why it matters: City presenters said they are planning in advance for capital costs and changing regulatory requirements — in particular new PFAS treatment obligations — and for aging infrastructure. Officials described their approach as a stabilized-rate model that smooths increases over time rather than imposing large, sudden spikes when expensive projects occur.

“We use a stabilized financial plan … which gives you a relatively straight line for rate increases over time,” Rice said. He and operations staff said that approach helped the city manage a previous wastewater‑treatment plant program and that they plan to revisit model assumptions next year.

Specifics and programs Al Pratt, water resource manager, proposed a water unit increase of 45¢ per unit (one unit = 748 gallons). “That equates for an average user that uses about 5 units per month, 2 dollars and 25 cents increase per month, which would be $27 per year for your average user,” Pratt said. Pratt listed routine operations and monitoring that the water division performs: sampling, treatment at a surface plant in Madbury and a PFAS treatment facility at Pease, operation of 10 groundwater wells, 4 storage tanks (10,600,000 gallons total capacity) and more than 200 miles of distribution mains. He noted the city completed an EPA-required water service line inventory in house with $135,000 from the state DES and free lead test kits provided to 330 customers.

Eric Fiedler, city engineer, proposed a sewer unit increase of 69¢ per unit, “approximately $3.45 per month” and said the increase funds collection, treatment and regulatory compliance, including nutrient limits under Great Bay permits and ongoing work under a consent decree to reduce combined‑sewer overflows (CSOs). Fiedler said the city has secured more than $30,000,000 in low‑interest State Revolving Fund loans and about $8,000,000 in principal‑forgiveness grants to support projects.

Capacity and performance Staff described system capacity in 2024 as having meaningful residual capacity: Pratt reported roughly 26% residual sustainable source capacity (about 1,200,000 gallons per day available) and about 28% residual maximum capacity in 2024. Fiedler said Pierce Island wastewater treatment’s nameplate capacity is about 6,130,000 gallons per day and Pease about 1,200,000 gallons per day, with 2024 flows below those maxima. He noted recent projects are already reducing flows and CSO impacts, and listed projects under construction or near completion around the city.

Accomplishments and in‑house work Presenters highlighted examples of in‑house work that saved money: staff installed mixers on a Lafayette storage tank with SCADA/electrical crews performing wiring and programming; operators ran a PFAS media pilot and replaced underperforming media themselves; and the meter crew swaps more than 700 meters per year and tests roughly 2,700 backflow devices.

Public comment and council questions Residents raised concerns about overall cost burdens and how administrative overhead is apportioned to enterprise funds. Petra Huden, a resident, cited the FY24 PAFR and the city’s practice of charging portions of general‑fund administrative salaries to enterprise funds, saying those billed amounts have risen and add to rate pressure.

Esther Kennedy, a resident, asked about CSO alerts and PFAS timelines; staff said recent heavy rains contributed to a CSO activation and that PFAS rule timing from EPA will be reviewed but that required treatments for two wells will likely proceed.

Councilors pressed staff on why the water rate increase is a higher percentage for FY26 despite modest revenue increases; presenters said the larger percentage restores net position and builds reserves ahead of capital and PFAS costs, while sewer increases were adjusted downward from earlier projections to ease combined impact on households (city noted a combined average monthly increase of about $5.70).

Next steps City staff reminded the council of the budget process timeline: a public hearing opens May 19, deliberation is scheduled for a May 28 work session, and the council will reopen the hearing on June 9 with adoption anticipated that night. No formal votes on rates occurred at the work session.

Ending note Officials said they will revisit the rate model and baseline assumptions next year and continue seeking grants and low‑interest loans to reduce impacts on ratepayers.