City of Austin Will Review the Way It Charges for Water

Jan 4, 2017

The water utility for the City of Austin is hosting two meetings today –  one in the morning and one this afternoon – to look at how Austinites pay for water. The meetings are part of a process called a cost of service rate study that could determine how water rates are calculated in coming years.  

The cost of service study looks at different groups of rate-payers – single-family homes, multi-family buildings and businesses, for example – and reviews how those groups are charged for water.

“We use the cost of service study as the basis for our rate determination and proposed rates as part of the annual budget process,” said Joseph Gonzalez, a budget and finance manager with Austin Water. 

Gonzalez is leading the study, which helps set the formula for any potential rate hikes and determine which tier of water user pays more.

So, how likely are new increases in the cost of water? Bill Moriarty, chairman of the Austin and Wastewater Commission, suspects customers will see "mid-single-digit-type increases" over the next couple of years.

One reason for that rise, he says, is because Austin needs to pay back the money it spent on a new water treatment plant completed a couple years ago. Another reason is that the city wants to continue encouraging conservation by charging people that use a lot of water more money.

That’s good for the sustainability of the city, but forces the utility to find new revenue sources.

“Austin has gotten so good at pricing their water in that way, and sending that strong conservation signal through their pricing, that actually they saw people really respond in the upper tiers of use,” said Sharlene Leurig, who chairs a task force on long-term water planning for the city. “Once they actually started responding, we weren’t meeting our financial targets.”

Like Moriarty, Leurig believes rate hikes are likely for at least some rate-payers. She says that’s not necessarily bad, as it increases conservation. Still, she says, the hikes are part of “a balancing act” to conserve water, while ensuring affordability for people struggling with Austin’s rising cost of living.

However, Austin Water says future rate hikes are not a forgone conclusion.

“Although our costs do increase annually – to the extent that we can improve our efficiency and improve operationally – that doesn’t necessarily mean that rates have to increase at that same rate.” said Gonzalez.  

A meeting about wholesale water rates meets this morning. The Public Involvement Committee Meeting is scheduled for this afternoon at Austin Water’s Waller Creek Center on East 6th Street.

You can also leave a comment on rates at the Austin Water Website if you can’t make the meeting.