Portland utility leaders urge restoring planned water and sewer rate increase to fund aging infrastructure

The Transportation and Infrastructure Committee heard Thursday morning that Portland’s water and sewer utilities face rising costs tied to required capital projects, aging underground assets and higher construction inflation — and that small reductions in forecasted rates would materially reduce the utilities’ ability to deliver core services.

Deputy City Administrator Priya Dhanapal opened the briefing for the Bureau of Environmental Services and the Portland Water Bureau, saying the proposed budget and rate requests fund “services Portlanders rely on every day, every time when someone turns off a tap, flushes the toilet, or walks through a neighborhood that's protected from flooding.”

Why it matters: Staff and the Portland Utility Board (PUB) told councilors that most of both bureaus’ budgets are already committed to debt service, regulatory compliance and capital work. Delaying or reducing planned rate increases, they argued, risks deferred maintenance, higher future costs and potential regulatory noncompliance.

Bureau officials described the scale of the challenge. Ting Lu, interim director of the Bureau of Environmental Services, said the bureaus’ combined five-year capital investment plan is $2,800,000,000 and that the city manages about $46,000,000,000 in utility assets, much of it more than a century old. “These projects are not optional,” Lu said of filtration and wastewater facilities and collection system upgrades required by state and federal regulators.

Business services manager Farshad Alhadi said utilities operate as enterprise funds governed by City Code, and that roughly 90% of their revenue comes from rate revenue. He described the rate-setting process that starts from multi‑year capital and operating forecasts, subtracts non‑rate revenues, and allocates costs across customer classes.

Interim Portland Water Bureau director Quisha Light said the bureaus fund affordability programs from rates and highlighted programs intended to protect low‑income customers: tiered discounts, interest‑free payment plans, crisis assistance and an expanded leak repair program. “For 75% of Portlanders, our rates are affordable,” Light said, and staff reported distributing roughly $10,000,000 in assistance to more than 12,000 households so far this year.

On bill impacts, staff said a typical single‑family household would see modest monthly increases in the current forecast: low‑income tier 1 participants would see about a $4.59 monthly increase, while median family income (MFI) participants might see about a $1.86 monthly increase, assuming 500 cubic feet of consumption.

PUB members urged councilors to allow the utilities to collect planned revenue. Julia DeGraw of the Portland Utility Board said the PUB centers equity but must “prioritize intergenerational equity as well as affordability of current rate payers,” adding: “Do not hold rates below what is needed to maintain the system.” Kyle Chipman, another PUB voting member, asked the committee to “retain the 6.33% combined rate increase originally planned to avoid added risks and costs.”

Council response: Committee members expressed concern about the consequences of holding down rates. Several members said the modest customer savings from a reduced increase — staff estimated about a 50¢ monthly reduction for a typical customer if the mayor’s guidance to reduce the increase is applied — do not justify the longer‑term risks to system reliability. The chair asked Councilor Green to carry the committee’s concerns to the finance committee when it considers the larger budget package later in the day.

What remains uncertain: Committee members asked about new costs tied to the Bull Run filtration project and the effect of a current LUBA (Land Use Board of Appeals) remand. Water Bureau finance director Cecilia Hune said the current rate proposal includes the project as budgeted, but added that the bureaus do not yet know how much additional cost, if any, the remand will ultimately add; staff said any new cost would be incorporated into a later rate forecast when the amount is known.

Staff warned that construction inflation and constrained contractor capacity mean delaying projects increases costs. Lu and BES finance staff said their capital improvement plan (CIP) is largely inflexible: about 80% of budgets are already committed to non‑discretionary items such as debt service and legally required work.

What happens next: Committee members signaled they are inclined to ask the finance committee to restore the original rate guidance rather than reduce the planned increase. Staff will update rate forecasts as new citywide cost and project information becomes available and will present detailed proposals to the finance committee and full council in the coming weeks.

Lede closing detail: The discussion was a briefing only; the Transportation and Infrastructure Committee did not take a formal vote on rates and fees. Council-level decisions on rate ordinances will occur in upcoming finance committee and full council sessions.