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Billings staff outlines FY27 wholesale wastewater rate method, schedules June 22 public hearing
Summary
City staff told the council it reached consensus with wholesale customers on a capacity‑plus‑usage methodology and plans a June 22 public hearing on proposed FY27 wholesale wastewater rates; staff emphasized a two‑component model and using a two‑year maximum 7‑day rolling average to account for peak refinery discharges.
City staff presented proposed FY27 wholesale wastewater rates and a new methodology intended to balance infrastructure costs with fairness to large industrial customers.
Public Works project lead Jennifer Duray told the council the proposed approach splits costs into two components: capacity (the treatment capacity a customer requires) and usage (the actual flow and pollutant strengths a customer sends over time). Duray said the method reflects both the infrastructure the city must maintain and the treatment processes required to handle seasonal and industrial variability.
Duray outlined updated revenue requirements under the proposal: Pendleton‑area refinery (PAR) was listed at about $982,000 (down from $985,000), Phillips 66 moved from $773,000 to roughly $771,000, and the Lockwood Water and Sewer District moved from about $519,000 to $538,000. She said the changes stem from revised estimates of flow, pollutant strengths and updated asset numbers.
On enforcement of unusually high‑strength discharges (so‑called "hot loads"), council members asked whether the city would use surcharges or another mechanism. Staff described moving away from complex incremental surcharges and instead relying on the maximum 7‑day rolling average (reviewed across the prior two years) so short bursts are captured in a predictable metric without immediately resetting multi‑year rates. Duray said staff will continue to monitor loads and perform another rate study, likely starting in December, to set rates for the following period.
Duray asked council for feedback before bringing the rates back for a public hearing and formal action. She said staff plans a public hearing on June 22, when the council will be asked to adopt the FY27 wholesale rates.
Councilors pressed staff on whether short, uncontrolled refinery discharges could overwhelm the system and what protections the city has; staff responded that the treatment system can handle the anticipated loads and that the 7‑day rolling average is intended to capture reserve capacity needs. Staff also noted operational differences among wholesalers—some can better control discharges than others—and said those differences are part of the ongoing review.
Next steps: staff will continue monitoring industrial loads, perform the scheduled rate study and present the proposal at a public hearing June 22.
