Consultants recommend final 10% utility rate increase in 2026 to fund $92 million CIP

RAFTELUS consultants presented the Village of Wellington with a five-year water and sewer revenue forecast and recommended the village implement the final year of a previously announced three‑year, 10% rate-adjustment program in fiscal 2026 and then return to annual indexing tied to the higher of CPI or the water/sewer maintenance index.

The recommendation was presented at a council workshop by Joe Williams and Michael Noga of RAFTELUS and introduced by village staff (Tanya Quicke). RAFTELUS said the village faces 4.5%–5% annual increases in operating costs over the forecasting period and identified a $92 million capital improvement program (CIP) over six years, which they summarized at about $12–$15 million per year.

The consultants said the recent 10% increases the village adopted in 2024 have helped restore margins between revenues and operating expenses and provide cash flow for pay‑as‑you‑go funding. RAFTELUS forecast roughly $53 million of the CIP could be funded from cash/reserves, supplemented by capacity charges, a projected PFAS settlement (about $6 million expected over several years) and new debt. The firm recommended pursuing State Revolving Fund (SRF) loans as the lowest‑cost debt option for wastewater and some water projects.

Staff described near-term debt activity tied to a meter replacement project: the council previously awarded about $6.5 million and expects to fund the remaining roughly $4.0 million later this year for an approximately $11 million project; staff said loan documentation will appear on an upcoming agenda and indicated a favorable interest rate near 1.2% for that SRF funding. Accurate meters were called out as “how you generate your revenue for the whole utility,” and the consultants said the meter project is critical to revenue accuracy.

RAFTELUS displayed alternative revenue trajectories: one that reverts to indexing after the FY26 10% increase and another that returns to indexing without the final 10%. The consultants said the dotted line that includes the final 10% provides additional funding to sustain the $53 million cash/reserve funding target and to support the full CIP. They reported existing debt service of approximately $1.6–$1.7 million annually and anticipated adding another $1.5 million of future debt service under the plan.

Staff said the village will mail rate-adjustment notices in June to all customers in the utility service area, meeting the statutory notice timeline, and that final approval of the utility budget is scheduled for the council’s August meeting. Staff and consultants also noted uncertainty in the timing of capacity charges and PFAS settlement distributions and emphasized that timing will influence cash flow year to year.

No formal council vote on rates was recorded in the workshop transcript; RAFTELUS and staff presented the forecast and recommendations for council consideration and budget scheduling.

The workshop concluded with staff reminding the council that notices will be mailed in June and that the budget approval remains on the August calendar.