Watertown consultants propose steep, front-loaded water and sewer hikes to cover $30M bond and rising wholesale costs

At its June 17 meeting the Watertown Water and Sewer Authority heard a presentation from New Gen Strategies and Solutions that proposed steep, front-loaded increases to water and sewer rates to cover a modeled $30 million bond and large wholesale cost increases from the city of Waterberry.

New Gen senior consultant Connor Durkus said the study models a $30 million bond (assumed 4.25% interest, level principal) to satisfy a judgment tied to Waterberry. “The lifetime cost … total debt service” in the model is about $45.6 million, Durkus said, describing roughly $15 million in interest on top of about $30.6 million in principal. The consultants allocated about 25% of that judgment to the water fund and 75% to sewer in their model.

Durkus and his colleague, Nick (manager, New Gen), told the authority that the primary drivers are sharp wholesale increases imposed by Waterberry—the presentation cited about a 49% increase in wholesale water purchases and about a 170% increase in wholesale sewer purchases projected for FY2027—plus new debt service. To respond, New Gen presented two scenarios: a 90-day cash-on-hand plan (smaller early increases) and a level-cash plan (higher early increases that preserve current cash balances). The firm recommended the level-cash scenario, which it said would set water increases at about 25.5% per year and sewer increases at about 31% per year for the first three years, followed by inflationary increases near 3% in years four and five.

Using a median residential example, the presentation showed a current combined quarterly bill of $213.37. Under the 90-day scenario New Gen estimated a 2027 bill of about $272 (roughly a $58, or 28%, increase). Under the level-cash scenario the 2027 combined bill was estimated at about $275 (roughly a 29% increase).

Consultants emphasized the cash and capital rationale: the level-cash approach keeps reserve balances higher to fund the capital improvement plan and to provide liquidity against unexpected shocks. Durkus said the model is dynamic and that consultants can rerun scenarios if assumptions change.

Authority members asked for clearer dollar schedules and sensitivity analysis. Joe Massie requested “the dollar amount in rates … including the first increase … the second increase … and the 30% increase,” and asked whether the bond payment should be shown as a separate line item on customer bills. Consultants responded that they can provide a full rate schedule with per-customer dollar amounts and that the model can be rerun under different interest-rate assumptions; they said they would email the detailed rate schedule after the meeting.

Tom Blair pressed the group on interest-rate risk, noting that the presentation assumes a 4.25% borrowing rate and asking how the model accounts for market swings. Durkus said the model can be adjusted for different rates and that the team tried to be conservative in other assumptions.

Next steps: the authority asked staff and the consultant to provide the detailed rate schedule and dollar figures, and indicated it will schedule a special meeting (outside the normal summer schedule) to formally set rates for implementation in the next billing cycle. No formal vote adopting rates occurred at the June 17 meeting.

The presentation and discussion are material to ratepayers: New Gen’s recommendation would produce sizable near-term increases for many customers and establishes a financing path for the Waterberry judgment and for rebuilding reserves and capital spending.