Cheyenne utility leaders propose $3/$2 monthly service-fee increases, outline $500,000 lead-service inventory and water-rights strategy

Cheyenne utility managers told City Council members at an April 18 work session that they plan modest monthly service-fee increases and are moving to inventory and eventually replace lead service lines while pursuing alternative water supplies and large industrial customers to stabilize revenue.

The Board of Public Utilities (BOPU) is not proposing a per-thousand-gallon rate increase this year, Brad Brooks, director for the board, said, but staff will recommend a $3-per-month increase to the water service fee and a $2-per-month increase to the sewer service fee. The proposed water budget for fiscal year 2026 is $31,000,000 using $3,900,000 in reserves; the sewer budget is $17,000,000 using $100,000 in reserves, Brooks said.

The moves are intended to shore up revenue for routine operations, debt service and capital rehabs after fiscal 2025 included larger grant and reserve balances, Brooks and other staff said. "We are not planning on doing any cost per thousand increase on people's water rates this year," Brooks said, and instead staff recommends adjusting the base service fees to improve revenue stability.

Why it matters: Utilities in Cheyenne are selling less water than in prior decades even as the city grows, according to BOPU figures presented at the meeting. Staff said the utility now averages roughly 8.6 million gallons per day in sales versus about 13 million in 1999; that decline magnifies the revenue impact of conservation and drought-driven demand changes and increases pressure on reserves and capital programs.

Key budget and spending details

- Water: FY26 budget $31,000,000; planned use of $3,900,000 in reserves. Brooks said this is down from a $37,000,000 budget in FY25 that used $4,500,000 in reserves and included about $6,000,000 in grant revenue.

- Sewer: FY26 budget $17,000,000; staff expect to use $100,000 in reserves and to carry forward $300,000 from prior allocations. BOPU staff said the sewer fund sits just above AWWA-recommended minimum reserves (roughly 120 days of operating expenses).

- Customer counts: BOPU reported about 21,500 residential accounts citywide. In winter months roughly 1,500 accounts pay only the base fee, and about 3,300 accounts pay for 1,000 gallons; staff said that pattern makes base-fee changes more visible for low-usage customers.

Personnel, equipment and insurance

Brooks and staff said FY26 includes a planned 4 percent pool for performance-based pay increases and ongoing equipment purchases, including another hydro-excavator to speed safe repairs of buried utilities. Staff noted a likely insurance cost increase (Blue Cross Blue Shield premiums could rise as much as 14% in their estimate) and a Delta Dental estimate around 4.85%.

Lead service-line inventory and replacement planning

BOPU staff described a stepped approach to the Environmental Protection Agency's (EPA) recent requirements on lead service lines: a record inventory, targeted excavation to confirm service material, and then replacement planning. The board placed $300,000 in FY25 to start the lead-service investigation and proposes $500,000 in FY26 to continue locating and documenting service materials, Brooks said.

Staff warned that full replacement would be costly: preliminary estimates presented at the meeting put the price to replace all suspected lead services in Cheyenne in the tens of millions, with staff citing a range of roughly $80 million to $100 million to replace service lines they identify as lead. Brooks said BOPU has limited records about past materials and must perform physical verification to meet EPA expectations.

Water supply risks and strategy

Frank Strong, engineering manager, told council members the utility is watching Colorado River basin trends and possible curtailment risks that could affect supplies and storage. Cheyenne staff described multiple lines of work to add or conserve supply: negotiating purchase or reservation agreements for conserved water (staff cited a potential deal in the Casper area for roughly 7,000 acre-feet at about $100/acre-foot in initial discussions), examining Bellvoir (city-owned) wells and other aquifers, and pursuing large industrial customers whose demand could bolster revenue.

Strong said modeling showed that adding roughly 7,000 acre-feet of alternative supply would materially protect storage during multi-year dry scenarios; conversely, bringing a very large new industrial customer (examples discussed in the meeting ranged up to about 2 million gallons per day) would raise revenue strongly but could deplete short-term storage unless paired with new supply.

Other infrastructure and regulatory notes

Staff flagged several other near-term capital items: replacement of outdated electrical and fire panels at the Dry Creek treatment plant, continued sewer-main upsizing payments tied to developer projects, and an ongoing hypochlorite conversion at the treatment plant expected to remove chlorine gas by spring 2026.

On tariffs and material costs, staff said recent supplier bids indicate tariff- and supply-driven increases on pipe, fittings and other materials; one contractor cited roughly a 7% tariff-driven increase on components used in rehabilitation work.

What was not decided

No formal council vote was recorded during the work session. Staff said they plan to bring formal rate and ordinance language to the City Council later; Brooks said he expects any service-fee change to be proposed to take effect Oct. 1. Staff also said details on grant or loan funding remain project-driven and uncertain, so the proposed budgets assume limited grant revenue for FY26.

Who spoke (selected)

- Brad Brooks, director for the Board of Public Utilities (BOPU) (presentation lead) - Frank Strong, engineering manager, BOPU - Brad Bowen, administration division manager, BOPU - John Edwards, Board of Public Utilities (board member) - Jeff Fassett, Board of Public Utilities (board member) - Beth Lance, (attorney; identified in session) - Scott Roybal, vice president, City Council - Cathy Emmons, City Council, Ward 2 - Dr. Michelle Aldridge, City Council, Ward 3 - Jeff White, City Council (asked questions)

Ending

Staff asked council members for questions and said they will return with ordinance language, a formal rate schedule and any grant- or loan-related updates. Brooks and Strong said BOPU will continue pursuing a mix of demand- and supply-side actions — service-fee changes, targeted rehabs, lead-service inventory work and negotiations for alternative water rights — to protect reserves and maintain operations without large per-thousand-gallon increases this year.