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Staff warns Upper Trinity wholesale increases will push Highland Village toward a $181,000 FY2026 deficit
Summary
City staff told the Highland Village City Council on Dec. 9 that Upper Trinity Regional Water District is raising wholesale water and sewer rates; staff recommended wholesale-rate adjustments to avoid an estimated $181,000 operating deficit next fiscal year and a cumulative $271,000 shortfall since 2008.
Highland Village, Texas — City staff told the council on Dec. 9 that upcoming wholesale-rate increases from the Upper Trinity Regional Water District will raise the city's water and sewer costs and, unless addressed, push Highland Village into a projected wholesale deficit in fiscal 2026.
"Based upon our current wholesale rates ... we would be in a deficit of $181,000," Speaker 6 reported, summarizing an analysis that compared the district's new charges to what Highland Village collects from customers. Staff said Upper Trinity plans to raise the water volume charge from $1.56 to $1.72 per 1,000 gallons, a change staff projected would add about $133,000 based on the city's consumption forecast; water-demand charges would add roughly $55,000 (about a 3.4% increase), and sewer demand/capital charges would add about $48,000 (about a 3.3% increase).
Staff presented a package of recommended wholesale adjustments intended to bring the city closer to breakeven: increase water demand charges by $0.25, water volume by $0.12 per 1,000 gallons, sewer demand by $0.40 and sewer volume by $0.04 per 1,000 gallons. If applied to customer bills, staff estimated the average residential increase (excluding summer irrigation) would be about $2.33 per month; using summer irrigation consumption assumptions (20,000 gallons) the increase would be about $3.29 per month.
Staff emphasized the recommendations affect the wholesale charges the city pays to Upper Trinity and are not changes to the city's retail rate structure. The presenter clarified timing for billing: the wholesale changes would affect the October billing cycle, with December/January bills reflecting those charges.
Councilors asked technical questions about how staff calculated the cumulative $90,000 deficit carried since 2008 and about annual variability in consumption. Staff said they typically evaluate adjustments each budget cycle and only implement rate changes when wholesale cost increases necessitate them.
No formal action was taken during the early work session; staff said the ordinance in place gives the city the mechanism to adjust wholesale charges as necessary and would bring any required ordinance amendments or rate changes through the regular budget process if council chooses.
