way up till the early ‘90s,” Taylor said. “And we as a community had the ability to ride out that capacity up until just recently.” One of the alternative funding sources that will be used to con- tribute to these projects are impact fees, which are allowed by the local government code as a mechanism for new development to pay for its impact on water and wastewater systems. New Braunfels City Council and the NBU board of trustees approved charging developers the maximum amount in impact fees allowable under state law, and that went into e ect earlier this year. NBU ocials anticipate receiving $169 million in impact fees over the next ve years to help fund capital projects through- out the city. According to NBU’s Chief Financial Ocer Dawn Schriewer, growth was one of the most important assump- tions that went into the utility’s ve- year operating budget. The utility estimates growth across all lines of its business to be at 4.9% over the next ve years. “Those dollars [from impact fees] can be used to help o set projects that are related to growth,” Schriewer said. “And that helps our custom- ers because then it doesn’t roll into the rates. So that development will be paying for a portion of the development.” The current average residential util- ity bill for NBU customers is 10.42% more than surrounding communities, including San Antonio, San Marcos, Seguin and Austin. According to Taylor, if City Council chose to vote against approving the two-year rate plan, NBU would begin burning through its reserves, priori- tize capital projects and be at risk for paying nes for being out of compli- ance with the Texas Commission on Environmental Quality. “We don’t want to ask for rate increases,” Taylor said. “We look for revenue from every other source prior For the rst time, a Rate Advisory Committee was formed in February 2021 to make recommendations to determine a cost of service based on customer class, accommodating growth, revenue suciency, util- ity stability and nancial strength, among other considerations. Committee Chair Justin Meadows gave a presentation during a April 3 to looking at rates.” Community input
COST OF
CONTINUED FROM 1
Building for growth New Braunfels City Council approved the rate plan during a regu- lar meeting April 10. That came after it received a presentation on how the rate plan contributes to the utility’s scal year 2023-24 budget and ve- year nancial operating plan during a workshop meeting April 3. The two-year rate plan will be in e ect from FY 2023-24 to FY 2024- 25, according to NBU. Across all cus- tomer classes, electricity rates will increase by an average of 4.8% in FY 2023-24 and 5.9% in FY 2024-25. Freese and Nichols, an engineer- ing rm, completed a cost of service and rate design study over the past two years that analyzed whether rates were being properly allocated to each customer classication and made recommendations toward the approved two-year rate plan. Based on results from the study, an average increase of sewer rate charges of 7.3% are proposed over the next two years. Water rates are proposed to increase by an average of 9.1% in FY 2023-24 and 13.4% in FY 2024-25. The new electric, water and waste- water rates are driven primarily from the need to acquire a new water sup- ply and build infrastructure to keep up with growth as well as meet regu- latory requirements set by the Texas Commission on Environmental Equality, according to NBU ocials. The new rate plan will help fund 161 capital improvement projects totaling nearly $1 billion that are in design stages or in progress by the utility for the next ve years. Taylor cited Winter Storm Uri as an example of how failure in utility delivery can be disastrous. “Each one of those three—water, sewer, electricity—when they’re not operating properly and when they’re not resilient, it truly is a risk to the public safety and to the public health,” Taylor said. Taylor said the growth rate of the community is attributing to the need to build additional utility infrastruc- ture throughout the city, including water and wastewater treatment plants as well as electricity discharge stations. Those additions lead to an increase in rates. Investment into maintaining existing infrastructure is also contributing to a higher expen- diture by the utility. “There was a signicant construc- tion e ort in New Braunfels, all the
IMPROVEMENT
New Braunfels Utilities is raising utility rates to invest money in new capital improvement projects that are necessary due to growth and maintaining existing infrastructure. The average NBU residential bill with all three services—water, wastewater, and electric—will see an increase of 6.9% next scal year and 6.4% the following year, according to NBU ocials. IMPACT FEES: A fee the city and NBU charges to developers to assist in funding roadway, water and wastewater capital improvement projects made necessary by the development COMPLIANCE: Regulatory compliance to meet electric, water and wastewater system state requirements OBLIGATION: Utility relocations NBU is conducting for city roadway projects
WHY RAISE RATES?
TERMS TO KNOW
WASTEWATER PROJECTS: $286.59M
Top three wastewater capital projects: ● McKenzie Water Reclamation Facility expansion: $66.63M ● McKenzie Interceptor upgrade: $49.13M ● Kuehler Water Reclamation Facility rehabilitation: $43.33M
$172.37M growth and
development*
$82.88M aging
infrastructure
$30.25M compliance $1.09M obligation
*21% OF GROWTH AND DEVELOPMENT CAPITAL COSTS ARE IMPACT FEE ELIGIBLE.
WATER PROJECTS: $310.43M
Top three water capital projects: ● Surface water treatment plant expansion (water supply facilities): $51.24M ● Senate Bill 3 Emergency Preparedness Plan generators: $20.83M ● Aquifer Storage and Recovery Project: $19.01M
$186.26M growth and
development*
$54.42M compliance $48.4M aging
infrastructure
$19. 01 M drought
management
$2.34M obligation
*33% OF GROWTH AND DEVELOPMENT CAPITAL COSTS ARE IMPACT FEE ELIGIBLE.
ELECTRIC PROJECTS: $187.62M
Top three electric capital projects: ● Distribution transformers: $30.19M ● System extensions (electric): $30.14M ● Electric meters: $18.97M
$125.62M growth and
development*
$36.87M aging
infrastructure $14.52 M information technology $9. 06 M transmission $1.55M contractual obligation
*IMPACT FEES DO NOT APPLY TO ELECTRIC CAPITAL PROJECTS.
SOURCE: NEW BRAUNFELS UTILITIESCOMMUNITY IMPACT
22
COMMUNITYIMPACT.COM
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