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MSD proposes 4.5% revenue increase and cost-of-service shift while seeking $153.6 million in capital spending
Summary
Metropolitan Sewer District presented a $255 million operating request and $153.6 million capital program for 2026, cited tariff-driven cost pressures and consent-decree obligations, asked the commission to approve a 4.5% system-wide revenue increase and recommended shifting inflow-and-infiltration allocation toward volume (from 25% to 57%), a move that would leave most residential customers’ minimum charges unchanged.
Metropolitan Sewer District officials presented their recommended 2026 operating and capital budgets to the Hamilton County commissioners on Nov. 18, outlining drivers for higher costs and proposing both programmatic and rate changes.
Diana Christie and staff said the MSD operating request totals about $255,000,900, with O&M estimated at roughly $158.7 million and debt-service a substantial portion of the remainder. MSD attributed cost pressures to negotiated wage increases, rising power and capacity charges, tariff-driven equipment-price swings and aging infrastructure. The presentation noted capacity costs have surged and that generation and supply-chain factors are driving higher electrical and equipment costs.
For capital, MSD proposed a $153,604,637 program in 2026 that includes planning and design allowances, construction allowances, and work tied to the federal consent-decree Phase 2b projects. MSD said it will seek approval to appropriate an initial $84 million in 2026 for planning and design, with other projects to return for board approval as they reach constructible readiness.
MSD recommended a 4.5% system-wide revenue increase for 2026 accompanied by a cost-of-service reallocation that shifts an INI (inflow-and-infiltration) allocation from 75% customer/25% volume to approximately 43% customer/57% volume. MSD said the combination would make rate changes more equitable by tying costs closer to usage; staff said most residential customers would not see an increase in their minimum charge under the proposed structure, though some large industrial or high-volume customers could see higher bills.
