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Consultant outlines 5‑year utility forecast, recommends mixed debt strategy to limit rate shocks
Summary
A NuGen consultant told the Weatherford Municipal Utility Board the city can meet large water and wastewater capital needs while limiting rate pain by combining debt issuances and modest annual rate increases; the board will choose a debt/cash mix before staff completes class‑level cost‑of‑service results.
Tony Georges of NuGen told the Weatherford Municipal Utility Board on June 27 that the city’s five‑year financial forecast balances large capital spending with rate stability by using a mix of cash and debt and modest, phased rate increases. The presentation covered a base case and multiple scenarios that change the debt term, the portion of capital funded by bonds versus cash, and the annual percentage dedicated to system rehab.
Georges said the base case assumes roughly $45 million of capital needs per year on average for water and wastewater and proposes two $50 million debt issuances in fiscal years 2025 and 2026 plus a $10 million issuance in 2028. That plan, he said, would allow smaller, spread‑out increases — about 2% per year for water and 8% per year for wastewater on a system‑average basis — while preserving healthy days‑cash‑on‑hand and debt service coverage ratios.
Why it matters: the board must set an overall funding strategy before staff completes a class‑level cost‑of‑service and recommends specific rate changes by customer class. The mix of debt and cash determines whether rate increases are smoothed over time or front‑loaded into higher short‑term hikes.
Georges walked the board through alternate outcomes. Shrinking the bond term from 30 to 20 years would raise near‑term rate pressure — he said water increases would jump from about 2% to roughly 5% per year and wastewater from about 8% to 10% per year to maintain coverage targets. In contrast, lowering annual rehab from 2% to 1.5% reduces modeled rate pressure (water falling toward ~1% and wastewater toward ~6.5% annually) but extends the timeline to renew infrastructure.
Board members pressed on reserves and regional comparisons. Georges said starting reserves would dip modestly in 2024 as capital is spent, then rebuild over the forecast window, and that including the electric system in system‑level metrics strengthens credit‑rating profiles. He also noted that some market events (for example, revenues tied to market sales after Winter Storm Uri) have benefited the electric fund but that pending market redesigns could change that picture.
What happens next: Georges asked the board to indicate a target debt‑to‑cash mix and a debt term so NuGen can finish class‑level cost‑of‑service work and draft rate recommendations. The board agreed staff would distribute the presentation and benchmarking data and that members could submit questions and preferences by July 3; staff plans a follow‑up presentation about class‑level impacts roughly a month later.
Representative quotes: “Those are the levers we have at our disposal: rate changes, debt, cash reserves and capital prioritization,” Georges said, describing how the model evaluates options. “If you change the debt term from 30 to 20 years, water moves from 2% to 5% per year.”
Board reaction and next procedural step: Board members asked for additional benchmarking and for the presentation materials to be circulated for review. Staff will return with class‑level cost‑of‑service results and draft rate recommendations for water, wastewater and electric services prior to any ordinance or formal rate adoption.
