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City staff recommend year‑two of three‑year water rate phase‑in; average residential bill to rise about $4 every two months
Summary
Asheville finance staff recommended maintaining the second year of a previously adopted three‑year water rate plan: a 7.5% increase for residential and commercial classes in FY26, with larger increases for manufacturing and wholesale classes; staff estimated the average residential bimonthly bill would rise by roughly $4.
City finance and utility staff urged the Asheville City Council at a budget work session to proceed with year two of a three‑year water rate adjustment adopted last year, citing a water cost‑of‑service study and capital needs.
Finance Director Tony McDowell and Budget Manager Lindsey Spangler summarized the study conducted by consultant Raftelis, which examined functional costs across the water system and recommended multi‑year, class‑specific rate adjustments to align rates with cost of service and to fund a multi‑year capital program. Staff said year one of the multi‑year program went into effect in the current fiscal year and helped the utility issue $27 million in water revenue bonds and increase pay‑as‑you‑go capital for meter replacement and infrastructure projects.
For FY26 staff proposed the middle column of the adopted phase‑in: a 7.5% increase for residential and commercial customers; roughly 14% and 20% for two manufacturing classes; and about 32% for wholesale customers. Staff explained that on average a residential customer who currently pays about $55 every two months would see approximately a $4 increase on that bimonthly bill under the proposed adjustments.
Staff said the adjustments aim to correct cross‑class subsidies the study identified (residential customers historically subsidized commercial and manufacturing classes), to maintain debt service coverage for bond ratings, and to fund planned treatment‑plant and distribution capital projects that existed before Helene and will continue after the storm. McDowell noted rating agencies have placed the water system on credit watch with negative implications since the storm and that continuing the adopted phase‑in helps the system meet coverage and reserve metrics the agencies monitor.
Staff recommended the council proceed with the year‑two rate changes and schedule fee adoption as part of the April fee approvals so the city can communicate changes to customers before the July effective date.
