Title
Receive an update regarding the Water and Wastewater Utility Fund.
Body
REQUESTOR:
City Council
BACKGROUND:
In 2025, the City Council adopted adjustments to the City’s water and wastewater rates following a comprehensive utility rate study. The adjustments took effect in November 2025 and were intended to address rising wholesale water and wastewater treatment costs, long-term Utility Fund sustainability, and significant capital needs associated with the City’s aging water and wastewater infrastructure. The adopted rate structure also removed the previous 10,000-gallon residential wastewater billing cap.
The City’s 2025 Water and Sewer Rate Study documented substantial increases in wholesale water and wastewater costs, a trend that has continued in subsequent years. From FY 2016 through FY 2027, Dallas Water Utilities’ (DWU) wholesale volume and demand rates increased by approximately 48% and 58%, respectively. Over the same period, the Trinity River Authority (TRA) wastewater treatment rate increased by approximately 103% through FY 2026, with a projected cumulative increase of 124% by FY 2027. These increases reflect continued upward pressure on the City’s cost of providing water and wastewater services.
In 2026, the City developed a long-range Water and Wastewater Capital Improvement Plan to prioritize rehabilitating and replacing aging infrastructure, including pipelines more than 60 years old. The existing plan contemplated an approximately 20-year rehabilitation period.
Following recent utility billing cycles, the City has received questions from residents regarding higher-than-expected bills, water consumption, meter accuracy, the effect of the revised wastewater rate structure, and the long-term financial needs of the utility system. Staff have been reviewing individual accounts and systemwide data to objectively evaluate these concerns.
In response to concerns raised by residents and City Council regarding increased water and wastewater bills, the City has taken several steps to improve transparency, provide assistance, and promote water conservation. These efforts include hosting weekly “Bring Your Bill” events to help residents better understand their charges, launching a Water Dashboard that allows customers to monitor daily consumption and receive potential leak alerts, and continuing conservation initiatives such as toilet replacement and irrigation checkup rebates. The City has also expanded communication through social media and educational resources to explain rate changes, encourage efficient water use, and help residents better manage their utility costs.
DISCUSSION:
Staff will provide an overview of the current water and wastewater rate structure and distinguish between changes resulting from adopted rates and changes resulting from customer consumption. Staff will also explain the residential wastewater billing methodology, the effect of removal of the previous 10,000-gallon wastewater cap, and the utility billing process.
Staff will review the City’s water meter inventory, replacement history, meter-reading process, available consumption data, procedures for reviewing unusually high bills, and options for meter accuracy testing. Staff will also present available systemwide data to determine whether recent increases reflect broader billing or meter anomalies or changes in actual consumption.
The presentation will review the financial structure of the Water and Wastewater Utility Fund, including wholesale costs paid to Dallas Water Utilities and the Trinity River Authority, operating and maintenance requirements, capital infrastructure needs, and long-term reserve requirements. The City’s rate model was designed to recover operating and scheduled capital costs and maintain appropriate reserves.
Staff will also discuss potential alternatives for Council consideration, including:
1. Maintaining the current residential wastewater billing structure.
2. Evaluating alternative timeframes for completing the long-term water and wastewater CIP, including the financial and infrastructure-risk implications of extending the current approximately 20-year program.
a) Reestablishing a residential wastewater billing cap.
b) Establishing a winter-average methodology for residential wastewater billing.
3. Continuing or expanding water conservation initiatives and customer education programs. Current City programs include toilet rebates and irrigation checkups.
Any changes to the adopted rate structure or capital funding plan would require additional financial modeling to determine the effect on Utility Fund revenues, future rate requirements, infrastructure replacement schedules, and individual customer bills.
FISCAL IMPACT:
There is no immediate fiscal impact associated with receiving the presentation and providing direction. Any future modification to the wastewater billing methodology, rate structure, conservation programs, or long-term CIP schedule may have a material fiscal impact on Utility Fund revenues and expenditures. Staff would return to Council with detailed financial modeling before recommending implementation of any changes. If Council decides to move towards changing the current rate structure, it will be in FY 2028.
DISTRICT:
Citywide
POSSIBLE COUNCIL ACTION:
N/A
ATTACHMENT(S):
1. Presentation