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Consultant recommends 10% water and wastewater rate hike to stabilize utility finances
Summary
NewGen Strategies told the Kern City Council a 10% combined water/wastewater increase in 2027 — followed by larger rises in later years — would help cover projected operating costs, debt service and a five-year $27 million capital program, with average residential bills rising about $6.83 monthly under the proposal.
NewGen Strategies presented a five-year utility rate study to the Kern City Council that recommends a 10% increase to water and wastewater rates in 2027 as the first step to stabilize finances.
Richard, the NewGen managing director, told the council the utility faces rising costs and that “your annual all the income costs are gonna increase projected increase is right under 4.5 percent” for O&M and “if you throw in transfers, debt service, and everything, you’re looking at about, almost a 10.7% increase per year for the next 5 years.” He said the study modeled a $27,000,000 capital program funded with debt and recommended the initial 10% increase to begin covering expenses and building reserves.
The presentation included customer impacts: NewGen estimated that for a typical residential customer (8,000 gallons water and 8,000 gallons sewer), a 10% combined increase would raise the monthly combined bill by about $6.83 in 2027. The consultant said the proposed increases would help the utility reach policy targets for reserves and manage upcoming debt service, but cautioned that later years may need larger percentage increases.
Council members asked about operating water and wastewater as a combined system versus stand-alone systems. The presenter said combined operation is an advantage for this community because wastewater costs can be difficult to fund on a stand-alone basis. The council thanked the consultants and signaled the study will inform further budget and bond planning.
The council did not take a formal vote on rate changes at the special meeting; the NewGen presentation is intended to guide future decisions, bond planning and additional council deliberations.
