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Lancaster hears NewGen utility rate study; staff builds FY25 budget around higher, phased increases
Summary
Consultant Chris Eckert told Lancaster council the water and wastewater utility faces near‑term capital needs and steep wholesale increases from suppliers, and staff recommended Option 2 — a larger near‑term increase to smooth anticipated 2026–27 wholesale shocks while preserving reserves.
Chris Eckert, a consultant with NewGen Strategies and Solutions, told the Lancaster City Council on Aug. 12 that the city’s water and wastewater utility is a stand‑alone enterprise that must generate enough revenue to cover operations, reserves and reinvestment.
Eckert presented NewGen’s five‑year rate study and identified two rate paths for fiscal 2025. He said the city faces roughly $9.7 million in capital work in the FY25–28 window and a longer‑term capital need approaching $150 million. He also warned that wholesale suppliers will push costs higher: “we’re estimating a 37% year over year increase anticipated from TRA coming in 2026,” he said, referring to the Trinity River Authority, and added that Dallas Water Utilities’ purchases are expected to rise at about 5% per year.
Under NewGen’s Option 1 — the “minimal” path — the average 5,000‑gallon household bill would rise from $111.81 to $114.41, a $2.60 monthly increase. Option 2 is a higher near‑term increase Eckert described as a smoothing strategy: it would raise the same average bill to about $121.41 (roughly a $9.60 monthly increase) to blunt the larger TRA‑driven spikes projected for 2026–27.
City Manager (speaker 3) told council staff built the proposed FY25 budget on Option 2 to level out future impacts. The manager said FY25 water/wastewater revenues are budgeted a little over $23 million with similar expenditures, and listed near‑term projects included in the operating budget: a sewer main replacement (Griffin to Vernon) budgeted at about $490,000 and approximately $2.9 million of additional mainline work and repairs.
Staff also proposed modest increases to customer assistance and rate relief: the city’s senior discount would increase from $5 to $7.50 per water and sewer account (raising the total senior discount from $10 to $15). For stormwater, the manager recommended raising commercial rates based on impervious surface to help stabilize residential bills.
Council members asked detailed questions about the difference between the two options, and multiple residents raised affordability concerns during public comment. One attendee told the council, “this is not something we wanna do…my heart goes out so much,” reflecting the tension between maintaining infrastructure and limiting cost impacts on households.
The presentation and council discussion set staff direction for the FY25 budget. Council did not take a formal rate adoption vote at the Aug. 12 meeting; staff scheduled required public hearings and will return with final rate and tax‑rate actions as part of the upcoming budget process.
