Chesterfield County proposes modest FY26 utilities rate increase to fund $1.7 billion 10‑year capital plan

Chesterfield County utilities directors presented the fiscal year 2026 operating budget, a 10‑year capital improvement program and proposed rate changes during a Board of Supervisors meeting, citing major projects and rising operating costs as drivers for modest rate increases.

The Department of Utilities is proposing a FY26 operating budget of $105,100,000, an increase of $1,000,000 (under 1%) from the current year, and a 10‑year capital improvement program (CIP) totaling approximately $1,700,000,000. George Hayes, director of the Department of Utilities, said the CIP focuses on pipes, pump stations, tanks, and required payments to the City of Richmond as well as additional supply and treatment capacity as existing facilities near permitted limits.

Hayes said the department requests one new administrative secretary position and is mirroring the general fund’s merit increases. Personnel costs are proposed at $34,100,000 (a $1,200,000 increase). Operating costs are the largest component at $66,600,000, driven in part by higher chemical costs at water and wastewater facilities; operating capital outlay is proposed to decrease by $1,000,000. “We are one of only nine water and wastewater utilities in the nation that have a AAA bond rating,” Hayes said, noting the county’s financial policies and reserves.

Why it matters: the CIP and operating increases will affect rates and connection fees paid by both existing and future customers. County staff said the projects take years to design and build, so the utility seeks steady, predictable revenue increases rather than large, sudden jumps when construction is required.

Major projects and schedule: Hayes highlighted three large capital efforts. The Appomattox River Water Treatment Plant would create the county’s fourth raw water supply. Hayes said permits are in place from the Virginia Marine Resources Commission and a Virginia Water Protection Permit from the Department of Environmental Quality; the intake permit allows withdrawals of up to 29,800,000 gallons per day in an initial 15‑year permit cycle and includes screening protective of fisheries. The county has contracted with Black & Veatch for engineering. Hayes described a two‑phase approach: a first phase treatment plant sized at 20,000,000 gallons per day with a 40,000,000 gallon per day intake, and an estimated first‑phase cost of $426,000,000. Design is expected to take about three years and construction about five years, with the first phase scheduled to come online in 2033.

Hayes said the county commissioned a particle‑tracking salinity study from the Virginia Institute of Marine Science (VIMS) during permitting; the model simulated an extended drought and found salinity impacts would first be observed well downstream of the proposed withdrawal site. Hayes added the county will perform a year‑long water quality monitoring program (estimated at about $5,000,000) to inform treatment design. He said the VIMS study cost about $125,000 and the consultant also reviewed historic raw water quality data from an existing downstream treatment plant.

The Addison Evans Water Treatment Plant flood‑wall project is intended to protect a 12,000,000 gallon‑per‑day conventional plant that Hayes said serves about 50,000 people (roughly 15% of the county’s supply). Design is complete; the construction contract was awarded to Kokosing Industries. Construction is anticipated to take about two years and the project cost is estimated at $21,200,000. Hayes said staff secured a $8,700,000 grant to offset the cost.

Procter Creek Wastewater Treatment Plant expansion is planned in phases. Hayes said the plant’s current capacity is 27,000,000 gallons per day and the long‑term goal is to double that to 54,000,000 gallons per day. The first phase is construction of a flow equalization basin (an initial 12,000,000 gpd basin with a planned later 6,000,000 gpd expansion to 18,000,000 gpd) that moderates diurnal flow peaks; the basin project is estimated at about $150,000,000. Hayes said construction is expected to take about four years and bidding will begin in April.

Proposed rates and fees: Kathy Sobczak, head of finance and administration for the Department of Utilities, said the county contracted Stantec for rate modeling and proposes a 4.24% average increase for a typical residential customer using 7 CCF (about 5,250 gallons). That increase equals $2.76 per month and a total monthly bill of $67.89 for the modeled usage. Sobczak presented three affordability “gut checks” including a regional comparison and an EPA affordability metric; she said the proposed bill would equate to about 5.5 hours of minimum‑wage work per month under the EPA’s recommended 8‑hour affordability threshold.

Connection fees and meter changes: The department proposes a 5% increase to water and wastewater connection fees for a standard 5/8‑inch meter; the combined connection fee for that meter type would be $11,996 (an increase of $301 for water and $270 for sewer). Sobczak explained the county is changing how it assigns equivalent residential units (ERUs) for larger meters so charges reflect actual meter flow capacity rather than meter nominal diameter, relying on American Water Works Association guidance. She also proposed higher installation charges when the county performs service‑line or meter installations (example: 5/8‑inch service line installation from $2,800 to $3,900) and an increase in companion meter installation from $800 to $930 driven by AMI meter costs and labor.

Industrial customers and other charges: Staff proposed a 10% increase to biochemical oxygen demand (BOD) and total suspended solids (TSS) surcharges; no changes to total nitrogen or total phosphorus surcharges were proposed. Sobczak also previewed proposed ordinance amendments to require a 1‑foot clear access area around meters and to allow recovery of costs from customers who tamper with or damage AMI equipment; those changes will be part of a consent agenda public hearing process.

Reserves and financial policy: Hayes described the county’s rate stabilization reserve and financial policy approach. He said the utilities have been contributing 100% of annual depreciation into a reserve used only for replacement of aging infrastructure, and that policy — including a requirement to maintain at least 25% of accumulated depreciation in reserve — supports the high bond rating and long‑term planning.

Next steps: County staff said the board will set a public hearing on related consent ordinance amendments for March 12 and a public hearing on proposed utility rates is scheduled for March 26, with budget adoption expected at the board’s April meeting.

The presentation included requests for board questions; board members asked for comparisons to neighboring jurisdictions and clarification of why connection fees vary between water and sewer. Staff described their cost‑based methodology for allocating expansion versus rehabilitation costs and explained that connection fees and debt for expansion are structured so future customers chiefly fund new capacity.

The board did not take a final rate vote at this meeting; staff will return to the board for the scheduled public hearings and the April adoption meeting.