Council adopts revised wholesale wastewater rates after debate about Lockwood contract

The Billings City Council approved a resolution adopting revised wholesale wastewater rates for fiscal year 2027 after staff described a methodology based on flows, strength characteristics and rolling averages to provide stable rates for the city and its three wholesale customers: Lockwood, Phillips 66 and PAR.

Staff said the FY2027 methodology is intended to recover operations, capital replacement and future investment costs, and that the overall change is modest (about $14,000). Council members discussed the allocation of costs among the three wholesale users and whether Lockwood — which lacks its own treatment plant and sends flows to the city system — is paying its fair share. Councilmember Roy Neese urged closer review of the Lockwood contract, arguing that selling city wastewater services to areas outside city limits shifts costs to city taxpayers, while proponents noted Lockwood paid a large share of costs and that the negotiated contract was the result of earlier EPA-driven settlement discussions.

Councilmember Scott Aspenlieder urged caution against ‘monkeying’ with a methodology that had been negotiated among the three parties and stressed legal exposure if rates were set without supporting data. Public commenters raised concerns about rising utility bills more broadly. On a roll call, the council adopted the rate resolution; Councilmember Roy Neese recorded a dissenting vote.

What it means: The rate changes take effect for FY2027 and will be administered under the revised methodology. Councilmembers who dissented said they want further review of the Lockwood arrangement and whether alternative long-term approaches might better reflect costs and development patterns.