El Paso County staff outline proposed 9% water, 12% sewer rate increases for East Montana system

El Paso County Public Works presented proposed rate increases on May 15 for the county-owned East Montana Water System that would take effect Oct. 1 if adopted, including a 9% increase to water charges and a 12% increase to sewer charges for the coming fiscal year.

The presentation, delivered by Public Works staff and a consultant, outlined a rolling five‑year financial plan intended to cover operating costs, fund capital repairs and replacements, and meet debt-service coverage and cash reserve targets. "The county owns a public water system that is considered an enterprise account," Norma Rivera Palacios, deputy county administrator for Public Works, said during the presentation.

The plan assumes the enterprise must generate revenue sufficient to fund annual expenses, exceed legal debt-service coverage minimums and maintain minimum cash reserves. The consultant said the projections include a 9% water revenue increase next year and continued 9% annual increases during most of the five‑year forecast (8% in the final year). For the sewer fund, he said the model starts with a 12% adjustment next year, then about 10% in middle years, tapering to 8% in the final year.

The county currently serves roughly 300 sewer customers and a larger number of water-only customers on the East Montana system. The consultant noted that because the sewer fund is smaller, it is more sensitive to changes in demand and costs. He said planned capital work over five years averages about $1.2 million annually, driven in part by a large storage tank project identified for fiscal 2028 and by a targeted meter replacement program being implemented by El Paso Water.

Using a typical residential example — 8,000 gallons monthly water use for a water-only customer — the presentation showed a current monthly water charge of roughly $65; the next-year increase would raise that by about $6 a month (rounded). For a typical sewer customer (5,000 gallons winter water use), the consultant modeled a rise from about $56 to about $63 per month under the proposed sewer rates. For combined water-and-sewer customers, the combined bill would increase roughly $13 a month under the proposed adjustments.

Staff said reserve targets include operating reserves sized at 90 days (25% of annual O&M) and a separate 90‑day reserve tied to purchased water charges, and that they are recommending increasing the capital reserve target by fiscal year 2030 to account for inflation and aging infrastructure.

No formal rate ordinance or resolution was before the court on May 15; the presentation was described as preparatory to future action. "We're gonna walk through just some of the drivers... and the ask in a future meeting with the resolutions and ordinances is limited to rates for water and sewer service, this next year and rates that would go into effect 10/01/2025 if adopted," the consultant said. Public Works staff said they will return with formal rate items at a later meeting and continue to update the five‑year plan.

County officials noted the impact on homeowners and said they plan to provide comparative information showing city rates alongside county charges to help residents understand total cost differences. "When you live out in the county, you don't pay a city tax rate. However, you pay a higher utility rate because it's a less, less dense system," Judge Samaniego said, asking staff to prepare comparisons.

Staff also flagged potential external funding opportunities: a state-level water development initiative described by a commissioner as a priority for the governor, but staff cautioned that large statewide needs likely exceed near-term allocations and that any relief remains uncertain.

What comes next: Public Works will return with formal rate ordinances and resolution language for court approval if the court chooses to proceed. The presented implementation date for any adopted rates is Oct. 1, 2025.