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Rowlett officials weigh two utility rate paths as wholesale water and wastewater costs climb
Summary
City staff and consultant Willdan presented two water/wastewater rate scenarios: one that fully passes projected wholesale and I&I costs to customers to protect the city’s bond rating, and a lower‑impact option that draws on reserves and spreads costs over time. Council asked staff to return with middle‑ground alternatives and commercial/residential split options.
Wendy, a city staff presenter, told the Rowlett City Council on June 29 that rating agencies have begun counting North Texas Municipal Water District payments as debt, a change that has pushed Rowlett’s all‑in debt service coverage ratio toward the lowest band of its current rating.
"S&P noted that maintaining a drop in coverage commensurate with fiscal 2024 levels is potentially pressuring the rating," Wendy said, citing the June 2025 bond‑rating call. She showed historical figures and said wholesale cost increases and a persistent inflow‑and‑infiltration (I&I) issue are the main drivers of expense growth.
Jason Gray, vice president at Willdan Financial Services, presented two modeled scenarios built on the city’s fiscal projections and wholesale rate forecasts. Scenario 1 would recover 100% of excess I&I through rates and, according to Willdan’s bill‑impact analysis, would raise an average residential water/sewer bill by about $21 per month in year one but restore the debt service coverage ratio near 1.17. "Scenario 2 funds half the excess I&I through rates and draws on reserves," Gray said, projecting a smaller average monthly customer increase of roughly $12 but a lower coverage ratio around 1.07.
Councilmembers pressed staff about the realism of the I&I assumption, whether the model accounted for the cost of corrective work, and alternatives that would split recovery across years or shift a greater share to commercial customers. City Manager Christophe said staff is already repairing discovered breaks and performing targeted contract work but has not funded a permanent in‑house I&I crew. He asked council for direction on which intermediate debt service coverage target to model.
Council direction: staff and Willdan were asked to model additional options that land between the two scenarios (for example, targeting a coverage ratio around 1.13–1.15), to show the effect of larger commercial increases, and to provide a schedule and quarterly update on I&I remediation progress.
