For decades, Utilities Rules & Regulations have allowed us the option to construct infrastructure when it is in the best interest to protect water or wastewater services, to allow for continued development or to provide benefit to the entire service area. The Eastern Wastewater System Expansion project met these criteria. The complexity and technical aspects of construction were also considered.
Because we highly value transparency with our customers, especially for significant business decisions, we recommended changes to our Financial Planning and Budgeting Instruction (I-3) in 2024. Additionally, we introduced a new guideline, Determination to Construct Water and/or Wastewater Extensions (G-13), to outline requirements for informing the Utilities Board about these decisions.
The costs of the project will be paid for through bonds and revenue generated from customer base rates. A wastewater base rate increase of 9% annually over the next five years was approved by City Council in November 2024 to support necessary capital investments in our wastewater system. The project comprises 5.5% annually over the next five years of that increase.
These up-front costs will be recovered through charges to homebuilders as development occurs (cost recovery). The contribution from developers depends on their level of benefit from the infrastructure. In other words, they will pay their proportional share.
The fees collected will offset future system costs for all users, mitigating the need for higher base-rate increases down the road.
In addition, our customers benefit from the fact that we won’t need to build a new wastewater treatment facility in the foreseeable future. Costs to build a new facility would have been passed on to all customers without the recovery option.