By Karen Gleason
The 830 Times
Significant increases in city water and wastewater rates approved by the city council
Tuesday were based on a new water and wastewater rate study commissioned by the city.
The city council in October 2023 approved a contract with NewGen Strategies & Solutions, LLC to carry out the rate study. Grant Rabon, NewGen partner, presented the
study to the council.
Interim City Finance Director Linda Coones introduced Rabon.
Rabon told the council, “I’m hopeful that by presenting this information, it will give the
city council and the mayor the relevant information to be able to make an informed
decision on the policy of rates going forward.”
Rabon went over how his recommendations for the new water and wastewater rates were
developed. He said both the water and wastewater departments have “net revenue
requirements,” which include money needed to operate and maintain the water system
and the wastewater system, money needed to replace equipment, money for cash funding
of projects and debt service.
He reminded council members the city has estimated it will need to incur $33 million in
new debt for water projects and $29.3 million in wastewater projects this year.
“If we take the current rates of the utility, that are currently in place, we’re forecasting
that the current rates would underperform and under-recover what we’ve identified is the
net revenue requirement. It’s a growing amount, year over year, over time, as the revenue
requirement is going up, and (if) the rates stay the same, you’ll get further and further
behind in terms of full cost recovery, the costs of maintaining and operating the system
and keeping it in good working condition,” Rabon said.
The rate study proposed increases to both the fixed rates and the volumetric rates for
water and wastewater.
The new rates are designed so that consumers who use more water, pay more.
“This is something that is very common in Texas and in the Southwest generally. It’s
something the Texas Water Development Board prefers to see from water providers
because it sends a pricing signal to conserve, or at least not waste, water, and I believe, if
I’m not mistaken, the city of Del Rio at one time in the past did have (this type of) rate
structure, but at some point along the way, they instead opted to have a flat rate for
residential customers. So we’re basically recommending that you re-institute what had
been done in Del Rio in the past,” Rabon said.
He noted water customers outside the city limits will pay 15 percent more than water
customers inside the city limits.
Mayor Pro-tem Jim DeReus questioned the study’s assumption that overall water usage
by water and wastewater customers would stay the same, saying he believed higher rates
would drive customers to use less water.
Rabon conceded “. . . it’s incredibly difficult to judge or quantify how much of a
reduction you might see,” but added in his analysis, he assumed overall water usage
would stay the same.
Apparently unconvinced, DeReus replied, “. . . Yards will be watered less. I guarantee
it.”
Rabon presented a slide to council titled “Residential Bill Impacts,” which forecast the
impacts of the new rates to an “average” Del Rio water and wastewater customer’s bill.
Rabon said he built “Impacts” slide depicting the bill of a household using 8,000 gallons
of water every month and creating 6,000 gallons of wastewater.
He pointed out the rate
study recommends the city maintain its current policy of allowing a 5 percent discount
for customers who are 65 years of age and older.
Councilwoman Carman Gutierrez said she had questions about the “Impacts” slide.
Gutierrez said, “So currently on the water, we pay $39.12, and then it will be $47.65
(beginning Oct. 1). That’s a difference of $8.53 increase, in that first year. . . And then on
the wastewater, it’s $23.63 currently, and the proposed is $39.70, for an increase of
$16.07, so at a minimum, for Fiscal Year 2026, I calculate that the increase for the water
and wastewater, at a minimum, because it’s also going to be based on consumption on the
water, would be $24.60.”
Rabon replied, “I agree almost completely with your representation. The only
clarification I would make is that (an actual bill) may or may not match this, depending
on how much water they actually use. . . This is assuming 8,000 gallons for water and
6,000 gallons of billed flow for wastewater. Under those conditions, your math is 100
percent right, but impacts on residents will vary, depending on how much water they use.
“If they’re a large water user, the impact is designed to be more significant because we’re
attempting to encourage them to curtail their consumption and so, that’s the design,” he
added.
Rabon closed his presentation on the rate study by showing the council where the new
water and wastewater rates stand in relation to those of other cities in Texas.
He showed the council the most recent Texas Municipal League survey of water and
wastewater rates of cities in Del Rio’s population range. He noted TML based its rate
survey on a bill assuming 5,000 gallons of water usage a month.
Rabon said, “. . . you’ll see for your peer group in this group, it’s roughly $37 per month,
and that compares favorably compared to what our proposed bill for 2026 would be,
which would be $33.25.”
He said the new rates for wastewater also compared favorably with other cities the size of
Del Rio.
“Here again, your peer group, the residential bill for wastewater is a little bit over $40 a
month, and under the proposed (new) rates, the bill in Del Rio would be, next year,
approximately $35.25 for 5,000 gallons of flow, which is the basis on which TML does
their survey,” Rabon said.
“So although these do forecast rate increases, they still are comparatively, at least by the
TML survey, reasonable bills for your rate-paying population to be able to afford,” he
added.
Following Rabon’s presentation of the rate study, City Manager Shawna Burkhart said
she had one slide to add to the presentation.
Burkhart told the council, “I simply wanted to make just a few points. Water and sewer
rates are a fee for service. I have been asked and told that this is really ‘a regressive tax.’
It is not. It is a fee for service, similar to electricity rates.
“Water rates include two component parts. . . The base rate is the cost to get the water
from the springs to your household tap before you turn on the tap and every cost to get it
there. Consumption is what it costs per 1,000 gallons to use the water, and we are
proposing to use water conservation rate pricing, which is encouraged by the Texas
Water Development Board,” Burkhart said.
She went on, “Wastewater rates include two component parts, the minimum monthly bill,
the cost to get the wastewater from the home or business to the wastewater plant and
treated. The volumetric rate, obviously, is based on the consumption of water. That is
how (the rate for) wastewater is determined, is based on the consumption of water.
“Enterprise funds (like the water and wastewater funds) must operate as a business.
That’s just a general statement, of revenues over expenditures. Enterprise funds cannot be
altered based on income criteria, and rates are what it costs to operate and run the water
and sewer system in Del Rio at this time. Those are just a few simplified points that I’d
like to highlight,” Burkhart said.
Burkhart further noted the five-year rate plan shows the city’s commitment to funding
agencies from whom the city will seek to borrow money for its water and wastewater
projects.
“All of those are dependent on our ability to make our debt payment, and this is how you,
as a council, will be illustrating to those financial entities, that we are solvent, we are
always going to make our debt payments, and this is our commitment to that effort,” the
city manager said.
Mayor Al Arreola then called for a motion to accept the study, and DeReus commented,
“In general, I try not to speak for other council members, but I think I can in this case.
None of us are happy about what I think is about ready to happen. Again, as I said, it’s
the least bad of all bad options. For whatever reasons, there’s been some delay in rate
increases, there’s been some delay in some maintenance work that needs to be done, and
it’s catching up to us now.”
Gutierrez made the motion to approve the study, with Councilman J.P. Sanchez gave the
second. The council members present all voted in favor of accepting the rate study.
The council then went on to approve ordinances setting the proposed water and
wastewater rates. (See story here.)
The writer can be reached at delriomagnoliafan@gmail.com
