In 2015, NewGen team members were retained to work with the City of Waco in reviewing its retail water rates. Based on recently completed Water and Wastewater Master Plans, the City is facing a funding need of approximately $285 million and $244 million in water and wastewater capital investment over the next 30 years in order to maintain regulatory compliance and provide quality service to its customers. This level of investment will have a significant impact on the citizens of the City, particularly given the challenging economic demographics of the City.
While the City has been able to maintain an excellent credit rating despite these demographics, City leadership understands that proactive action is necessary to maintain the affordability of customer water and wastewater rates while executing the capital program. To assist the City, the Project Team prepared a 10-year financial plan for the City’s water and wastewater utility, recognizing the impact of debt-funding the majority of the capital plan, as well as the general impact of inflation, low levels of customer growth, and estimated changes in customer demand. This plan also took into account key financial metrics that the City must maintain to ensure the financial stability of the utility including the maintenance of sufficient working cash reserves and appropriate debt service coverage levels.
Based on this financial plan, the Project Team worked with City staff to prepare an initial 10-year water and wastewater rate plan which provides necessary funding for the capital plan and increases the level of fixed charge revenue, while recognizing the overall affordability of rates and the need to continue to encourage water conservation through customer price signals. The developed plan received the unanimous endorsement of the City Council and will serve as an essential guide for the City as it begins to execute its capital program in the coming Fiscal Year.