Wichita Falls City Manager Explains Water Rates

The City Manager for Wichita Falls, Darron Leiker has released a statement explaining the proposed water rate increase.  Leiker explains:

I want to clearly state the facts that recently led the City to propose a water rate increase. The

Water Fund is operated as a standalone business or enterprise, meaning that the only revenues we have to operate and maintain three reservoirs, two state-of-art water treatment plants, pumping stations and hundreds of miles of pipelines are from the charges on your water bills.

The General Fund (or property tax fund) does not support the Water Fund or vice versa. We do not use the Water Fund revenues to pay for streets, police, fire services, parks, MPEC, etc.

As a result of this ongoing record-breaking drought, we have seen our water revenues fall by 45%. Yes, this is a result of conservation, which has obviously been required to help us survive this drought, and we appreciate all of the valiant efforts of the community in this regard. However, we must still maintain and pay for a large water treatment and delivery system, whether we sell one drop of water or not. We have held off increasing water rates during this drought as long as possible (to account for reduced consumption), but we cannot wait any longer because all of our Water System Reserve Funds are depleted.

We have had to use these reserves (over $4 million) during the last year to pay for normal operating costs of the Water/Sewer System. We have also deferred over $3 million of normal routine water/sewer line replacement projects during this time. We still have a backlog of $65 million in water lines and $45 million worth of sewer lines that have been identified as needing replaced. Leaky or busted water lines cost us millions of gallons of water annually.

You might say:

"With most businesses, if their revenues are down they will simply cut their expenses by a like amount to make up this difference. Why can't the City do this?"

Simply put, we are not like a normal business. Almost all of the operating costs of the Water System are FIXED at the same amount and cannot be reduced when we sell less water.

For example, we have annual debt service payments for previous water system improvement projects that remain the same regardless of how much water we sell. We must meet a myriad of unfunded federal

and state mandates, such as the number of plant operators that must be on site at the plants 24

hours per day, 7 days per week, and 365 days per year. These operators ensure that water

quality and safety standards are met, regardless of how much water is moving through the


ystem. We also must continue to maintain and repair water/sewer lines and other system

infrastructure even in times when water sales are below normal.

So, unlike other business enterprises, we have very little discretion to lower costs just because we are earning less money on the amount of product we are selling. We are not a widget factory, where if the number of

widget orders fall, we can throttle back the widget assembly line, buy less raw material and

eliminate workers, to close the deficit. In fact, the opposite is true.

During this drought we've had to spend more money to treat and sell less water. We've also seen more leaks and water

main breaks.

In addition, we have covenants to our bond holders that require the City to establish water rates sufficient to meet debt service coverage requirements. Our debt service is the annual payment of principal and interest for major water system improvements that were made over the last 10 years to improve our water supply and treatment capabilities such as the Lake Kemp Supply Project, Reverse Osmosis and Microfiltration Treatment, and other Conventional Treatment Improvements. Failing to comply with these covenants would increase our future interest costs by lowering our credit rating. With current conservation measures in place, we will not be meeting these requirements unless we increase water rates.

Also, the proposed rate adjustment is needed to pay for bonds that will be required for the Indirect Potable Reuse Project. This is a new project that is estimated to cost $30 million to construct a permanent pipeline and pump station to convey treated effluent from our River Road Wastewater Treatment Plant to Lake Arrowhead. This important project is estimated to save nearly 10 million gallons of water per day.

Finally, our proposed rate adjustment will set aside $1 million annually to begin a war chest to help pay for a future water supply project to shore up the amount of dependable water we have for our citizens.

At this time, several long term water supply projects are being evaluated to determine which one is the most cost effective and provides the best dependable water supply. Regardless of the project that ultimately becomes our next supply, this rate increase will be needed to help with the cost of that project.

So just how much will the proposed rate increase cost? It will result in an approximate $14 per month increase to the average residential water customer (based on 6 units or 4,488 gallons used). So for about 46 cents more per day, we can address the critical issues I've outlined above. We all would agree that water is not a discretionary item. It is necessary to sustain life and protect property, and helps maintain the quality of life that we all expect. Compare your water bill to your monthly cell phone, home or business phone, Internet service, cable or satellite television bills, and then ask yourself how our water prices stack up and which is more important.

For less than one penny, you can buy 3 gallons of highly purified drinking water, delivered to your home or business, available for use around the clock, which also protects your property in case of fire. A lot of people wouldn't even question the price of bottled water at over $1 per bottle, per 16 ounce ($4 per gallon), that they had to go and pick up while using $3.50 per gallon gasoline. Our city's potable water is a bargain for a commodity that we cannot live without.

Darron Leiker

Wichita Falls City Manager