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Consultant warns Amarillo faces about 8.4% annual revenue need to fund wastewater plant and rising wholesale water costs
Summary
NewGen consultant Chris Eckert told the Amarillo City Council the utility could need roughly an 8.4% average annual revenue increase through 2036 to support a roughly $1.5 billion wastewater treatment plant and anticipated wholesale water cost hikes; council directed staff to return with allocation options and timing.
Chris Eckert, principal with NewGen Strategies and Solutions, told the council the firm's revenue sufficiency analysis shows a substantial long-term revenue gap tied to two major drivers: a working estimate for a new wastewater treatment plant of about $1.5 billion and escalating costs for purchased water from the Canadian River Municipal Water Authority (CRMWA). "What we're looking at is about an 8.4% overall revenue increase every year from 2026 to 2036," Eckert said.
Eckert explained the analysis separates the revenue need from rate design and policy choices that will determine how increases are allocated among residential, commercial and industrial customers. "I'm not talking about rate increases today," he said. "This is the overall revenue increase in the utility. The next step is to divide that between your residential, your commercial, your industrial customers." He recommended staging adjustments, timing changes to coincide with the budget cycle (targeting October), and pursuing smaller annual increases rather than one large hike to reduce shock for households.
Councilmembers pressed on assumptions and next steps. Mayor Pro Tem and others asked how much of the modeled improvement depends on assumed new contract revenue tied to a pending large customer, noting that Eckert had included a projection from a city negotiation in the forecast. Eckert acknowledged that the Fermi contract projection was included as a modeled revenue source and said the analysis will be revised if that revenue does not materialize. "Without this, had we not factored this in, then potential required revenue increases would be even higher into the future," he said.
Staff and the consultant agreed to return with a cost-of-service study that allocates the overall revenue need across customer classes, and to provide options that preserve affordability for low-volume users. Council asked staff to bring a measurable plan and timelines, check reserve calculations and verify cash-on-hand numbers that feed the consultant's reserve and debt-service-coverage modeling.
Next steps: NewGen will come back this summer with a cost-of-service allocation, range of rate-design options and recommended timing to align any initial changes with the 2026–27 budget adoption and the proposed October effective date.
