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Consultant recommends 2% utility rate increase; EAA pass-through fee could push bills 5—6%
Summary
HDR's rate study recommended a 2% across-the-board water and wastewater rate increase but projected a large Edwards Aquifer Authority (EAA) pass-through fee rise that could raise a typical customer's bill about $5.41 (roughly 5—6%). Council asked staff to clarify communications to residents.
An HDR consultant told the Universal City Council the city's draft utility rate study models a 2% across-the-board increase for water and wastewater but warned that an EAA (Edwards Aquifer Authority) management fee increase would add substantially to customer bills.
"We would recommend based on all the information that we have and and modeling this, a 2% rate increase across the board for both water and wastewater," the HDR consultant said during the presentation. He added the EAA management fee modeled in the study is expected to rise markedly and that the EAA portion of a typical bill increase would be about $3.65 of the projected $5.41 total increase.
The consultant explained assumptions behind the model: a one-year purchase of groundwater rights ($5,000,000 assumed, partially from impact fees and fund balance), an annual $500,000 for water rehabilitation projects, and debt-funded projects split between the public works annex and water infrastructure. Those capital and water-right costs factor into the long-range rate projections, he said.
Councilmembers pressed staff on how to communicate the gap between the staff-recommended 2% rate change and the larger total bill increase customers will see after the EAA pass-through. "Your bill is gonna go up 6%," one councilmember said; staff acknowledged that the exact percent varies by usage and said a typical customer could see a 5% to 6% increase.
Finance staff said the rate study also assumes that some rehab projects will be paid out of prior bond proceeds rather than cash, which helped limit the modeled city rate increase. The study notes that wastewater treatment providers are projecting their own annual rate increases (the presentation cited 4% to 5% assumptions for wholesale treatment charges), which also affect the city's cost projections.
The council received the study for discussion and asked staff to prepare clear explanatory materials for residents, including a newsletter explaining the EAA fee changes and how the total bill differs from the city's 2% rate recommendation.
Next steps: staff will include the rate study in budget materials ahead of the July budget workshop and return with ordinance language and formal rate proposals if the council chooses to proceed.
