Why is my water bill going up?
After months of discussion, presentations by City staff, and a study conducted by a nationally recognized utility rate expert, the League City Council approved an increase to the City’s water and sewer rates in February of 2020. As a result, residential and commercial utility customers began to see a gradual increase in their monthly bill in May 2020. The last time League City increased its utility rates was in 2015. In addition to an overall water and sewer rate adjustment, City Council also approved an adjustment to the monthly rate for commercial meters. The rate adjustment will differentiate residential and commercial customers to better reflect the additional demand commercial customers place on the City’s water and sewer systems.
What does this mean to you?
The average League City residential customer uses 7,000 gallons a month. Under the new rates, they will see an approximate 4% annual increase in their monthly water and wastewater bill each year for five years, starting in May 2020 and ending in 2024. The total increase after five years will be nearly 20%.
Why are the rates increasing?
The new rates are supported by a recent study conducted by WillDan, a nationally recognized water rate consultant. The 2019 study recommended League City increase its current rates to ensure the City’s water and sewer systems remain financially sound. The study cited several reasons to support an increase, including:
- Annual inflation costs associated with daily operations and expenses.
- Need to increase City’s surface water capacity for future buildout and costs associated with the wholesale purchase of a safe and reliable water source. Currently League City’s population is 110,000 and is expected to double in the next 30-40 years.
- Nearly $500 million in water and wastewater infrastructure needs over the next 10 years including the replacement and enlargement of a nearly 50-year-old transmission line that supplies 70% of the City’s surface water.
How does League City’s utility rates compare to other cities?
Currently, League City’s residential rates are near the statewide average and are lower than several cities in the surrounding area, including Houston, Galveston, Pearland, Baytown, and Alvin. According to research by the American Water Works Association, average utility rates across Texas have been increasing around 6% each year. AAWA is also forecasting water and wastewater rates across the U.S. to triple in the next 15 years because of inflation, capital improvement costs, and because almost 40% percent of cities are currently not charging rates that cover their costs. The chart below compares monthly utility bill charges for cities in the Houston-Galveston region based on 10,000 gallons of monthly water use.
How are the operational and maintenance costs of the City’s water and wastewater systems funded?
League City’s water and wastewater systems operate as a “citizen’s cooperative.” Those who pay a monthly utility bill (nearly 35,000 residential and commercial customers) are part of the cooperative and essentially own a piece of the cooperative. As part of the cooperative, City staff work to ensure incoming revenue (from customer utility bills) is equal to, or slightly above, the cost of running and maintaining the City’s water and wastewater systems. The newly approved water and sewer rate will:
- Enable League City to operate the cooperative on a stand-alone basis independent of general fund assistance (property taxes).
- Fund much needed capital improvements to the City’s water and wastewater infrastructure that ultimately will improve the quality of service customers receive.
- Provide well-functioning and financially sound water and sewer systems for future generations.
Shouldn’t developers pay for the new infrastructure needed to support the growth of the City’s water and wastewater systems?
When a new home or commercial development is built, a fee is paid to League City in order for that home or business to have access to the City’s water and wastewater systems. These are called capital recovery fees. Currently, League City collects the maximum water and wastewater capital recovery fees allowed by the state. The typical single family, new home with a 3/4" meter will pay about $8,000. Based on League City’s current growth, 26% of the $500 million in water and wastewater infrastructure needs over the next 10 years will funded by capital recovery fees.
Please refer to the chart here for rate increases.