Pasco briefing: industrial wastewater utility faces multi‑million shortfall; processors warn against passing costs to customers

City public‑works staff told the Pasco City Council on May 13 that the industrial wastewater utility known as the Processed Water Reuse Facility (PWRF) is running a structural deficit after its 2025 startup. Director Sarah said the utility used reserves to limit a 2025 operating gap but remains about $800,000 short; updated modeling presented to council projects a substantially larger cumulative shortfall in 2026 if no corrective action is taken.

Why the gap widened: staff cited three primary drivers — higher than projected operating and maintenance costs charged by the private operator that runs biological treatment and RNG facilities, lower‑than‑expected revenue from renewable natural gas (RNG) sales, and changes to permitted treatment volumes after rates were set. Director Sarah said the PWRF expansion (a public‑private build and operate arrangement) was intended to improve regulatory compliance and provide capacity for regional processors, and that the city pays the operator under a long‑term wastewater‑treatment agreement in which debt service and O&M are billed to the city and recovered through PWRF rates.

Processors and city response: Processors serving the plant — including Grimway, Simplot, Oregon Potato Company and Twin City Foods — told council large additional rate hikes would be untenable. “We can’t sustain multi‑million‑dollar increases,” said Sham Ashi of Grimway. “Burnham missed by over $8 million while the city was about $3 million under budget,” said Twin City Foods president Dale Goer, urging closer scrutiny of operator performance. Elizabeth Ober of Oregon Potato echoed those concerns and urged the city to separate core wastewater‑treatment charges from RNG payback expectations.

Council and staff next steps: Council asked staff to continue work‑group discussions with processors and the private operator, and to return with a short list of vetted alternatives. Options being explored include renegotiation of the operating agreement, use of restricted federal tax‑credit proceeds that the city holds as a program reserve, temporary subsidies, and staged rate changes. Director Sarah and the city manager emphasized no final rate decision will be presented until council reviews specific options; staff plans to convene the processors’ work group again next week and to bring council formal alternative packages for consideration.

Bottom line: The PWRF is an operationally complex public‑private facility whose startup year revealed gaps between projected RNG revenue and actual performance and higher operator costs. The city and customers are negotiating alternatives; processors urged the city not to respond with sudden large rate passes to customers without exhausting other remedies or contractual reviews.