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Pasco utility rate review paused pending focused staff-and-stakeholder work
Summary
City staff says the Process Water Reuse Facility (PWRF) is operating in the red after its 2025 startup; staff and local food processors are continuing a workgroup to find options before any rate change is proposed to council.
City of Pasco staff reported an operating deficit at the Process Water Reuse Facility (PWRF) after its 2025 startup and told the council they will not present a recommended rate increase immediately. The PWRF, which processes industrial food‑processing wastewater and includes a contracted third‑party operator for biological treatment, ran a 2025 deficit that staff says left the fund approximately $800,000 short. Staff told the council they expect the gap to grow under initial projections for 2026 unless alternatives are identified.
Director Sarah said the facility expanded between 2023 and 2025 and entered its first full operating year in 2025. The city owns and operates portions of the system, while a private partner operates the biological treatment and renewable‑natural‑gas (RNG) generation. Staff said the contracted operator exceeded its operating budget in 2025 and RNG revenues fell short of the levels projected when the expansion was approved. That combination, staff said, drove the PWRF shortfall even though the city’s own operating costs were below budget.
City staff and the processors served by the plant have been meeting in a stakeholder workgroup since January to review options. Processors told the council that previously adopted rate increases were already steep and that most of them cannot absorb another jump without threatening their operations and local jobs. Several processors — including representatives for Grimway Enterprises, Simplot and Twin City Foods — urged the council and staff to pursue alternatives such as renegotiating operating contracts, pursuing improved RNG performance, and using restricted reserves or tax‑credit proceeds to bridge the gap while longer‑term changes are implemented.
City management emphasized the city’s obligation to maintain a self‑sustaining utility fund but acknowledged the unusual nature of the PWRF: a small customer base of large industrial users makes any rate changes far more impactful than a typical water or sewer rate filing. The mayor and council asked staff to continue the workgroup and return with a set of vetted options before asking the council to act. Staff said one early option discussed was applying interest from federal tax‑credit receipts the project generated; other ideas include renegotiation with the private operator or time‑limited city support while operational issues are corrected.
The council did not take action on rates. City staff said they will meet next with the stakeholder group and come back to council with concrete alternatives for decision. Processor representatives asked for transparency and a predictable timetable; city staff said they will provide updated financial summaries and potential scenarios to the council once the group reaches consensus on viable approaches.
Outcome: No rate change adopted; staff will continue stakeholder work and return to council with alternatives.
