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Food processors warn proposed PWRF rate increases are unsustainable as city reviews $4.5M–$5.6M shortfall
Summary
City staff reported the Process Water Reuse Facility ran a large deficit in 2025 and projected a possible multi-million-dollar shortfall in 2026; local food processors told council previously adopted rate hikes and modeled increases are untenable and urged the city to pursue contract negotiations and use of federal tax-credit proceeds rather than pushing costs onto customers.
City staff told the Pasco City Council on Wednesday night that the Process Water Reuse Facility (PWRF) has not performed to financial projections following a 2023'2025 expansion and the first year of operation under a new rate model. Staff reported 2025 actuals produced a material gap that required reserve use and said updated projections showed a potential cumulative shortfall in 2026 unless alternatives are implemented.
Public Works Director Sarah described the plant as a public-private partnership in which the city owns portions of the system while a private partner (identified in staff materials as the biological-treatment operator) runs the biological-treatment and renewable-natural-gas (RNG) components under a 30-year wastewater-treatment agreement. Director Sarah said drivers of the shortfall include higher-than-projected third-party O&M costs, lower-than-expected RNG revenue and permit changes that altered billed volumes.
Staff said the ordinance-approved rate model for 2025 had set new charges (flow, BOD, TSS and storage components) that went into effect in January 2025; 2025 actual results left the utility using reserves and with an $800,000 deficit in the fund at year-end after reserve draws. In a staff chart comparing model to actuals, Director Sarah described a larger gap earlier in 2025 (characterized in presentation as a $4.5 million difference on one slide) and projected a potential $5.6 million shortfall for 2026 under current assumptions.
Processors who depend on the PWRF said the adopted and modeled rates represent a step change they cannot sustain. Representatives from Grimway Enterprises, Simplot, Twin City Foods and other firms described dramatic increases compared with historical rates and urged council to pursue alternate solutions rather than implementing large rate increases.
"We can't afford to pay more than what we've been paying for 25," said a Grimway representative who told council her company's PWRF rate had jumped substantially; she said Grimway experienced a sevenfold increase in its rate after the 2025 changes. Jodie Fleshman from Simplot described the increases as "moving up millions" and said the company cannot indefinitely shoulder escalating utility costs that threaten operations. Twin City Foods' president Dale Goyer told council the city's own operating results were favorable compared with the private operator's materially over-budget O&M and underperformance on RNG revenue.
Processors and council members discussed options: (1) pursue contract renegotiation or enhanced oversight of the private operator; (2) pursue additional RNG or operational efficiencies to increase revenue; (3) consider temporary use of federal tax-credit proceeds or interest earnings held in a restricted fund to smooth rates while longer-term solutions are negotiated; or (4) adopt rate increases, which several council members said they would oppose without alternatives.
City Manager Stewart said staff is evaluating contractual, financial and legal options and is consulting attorneys on the city's remedies under existing agreements. Staff formed a work group including processor representatives and will continue negotiations; a work-group meeting was scheduled for the next Monday. Council members requested staff return with vetted alternatives and a recommended path forward before any rate change is adopted.
Why it matters: The PWRF serves a small set of large industrial customers whose competitiveness and job retention affect the local economy. Sudden, substantial rate increases could have economic consequences for those businesses and for the broader local workforce.
What's next: Staff will continue the work-group process, engage the private operator in discussions about cost control and RNG performance, and return to council with alternative packages for consideration. Some council members indicated they would not support immediate rate increases and asked staff to prioritize contract remedies and use of available restricted funds to bridge shortfalls temporarily.
Direct quotes drawn from council meeting: "We can't afford to pay more than what we've been paying for 25" (Grimway representative). "The increases are untenable... we're moving up millions" (Simplot representative). "Burnham was operating over $3.5 million over budget on O&M and delivered $5 million less in RNG credits" (Twin City Foods representative summarizing staff materials).
