City proposes slight increase in utility rates

Seguin, TX, USA / Seguin Today
Darren Dunn

(Seguin) — There’s more budget news from the city of Seguin and some of the details could slightly impact your pocketbook.

The Seguin City Council is in the middle of its budget process, which includes a new general fund budget and tax rate for its coming fiscal year. Last week, we reported that the city had proposed expenditures of $54 million and a tax rate of 51.25 cents, which is identical to the city’s current tax rate. The general fund pays for things like libraries, parks, police, and fire services — things that are normally funded by property taxes. But the city of Seguin is also a utility, which means the city’s new budget will also include new rates for water, sewer and electrical services. The proposed 2024-25 fiscal year utility fund budget calls for a slight increase in water and wastewater rates next year.

Dan Jackson, of Wildan Financial Services, has been consulting the city on its water and sewer rates for years. Jackson says there’s no major deviation from the rate plan study that’s been used by the city in past years. Jackson says a five percent increase has been proposed for both services next year.  

“We show our proposed rates to be effective in October 2024 which is a five percent adjustment. We are projecting that there will be a five percent adjustment in 2025 and a five percent adjustment in 2026 but after that, the adjustments will only be three percent. On the wastewater side, you are looking at, again, a five percent adjustment and continued five percent adjustments for each of the next four years,” said Jackson.

Jackson says the five percent increase should not adversely impact most households in the city of Seguin.

“The average customer here in the city of Seguin uses about five to six thousand gallons of water and wastewater service a month. Now, that’s an average. Some people use more. Some people use less. But what that also means is about 70 percent of your monthly bills are going to be 5,000 gallons or less. So, that makes 5,000 gallons a good benchmark to use. Right now, the average customer who uses 5,000 gallons pays $104.90 for that service. Under this plan, that bill will go up about $5.24 a month. That’s a five percent adjustment. Next year, it will go up by another $5 to 5 and a half dollars and then it will go up by about another $5 to 5 and half dollars in 2026 but after that, the increases will be more in the four to five dollar a month range. The average utility in the United States is raising its rates five to six percent every year. So, these rate adjustments are right in line with what both the state and national average is,” said Jackson.

Jackson says the increases not only help the city pay for the water and sewer services that it offers, but it also helps the city be better prepared for the large amount growth that continues to come this way.

“People ask what do I get in return for contributing this to the city? This is what you get. You get a secure future and a system that will provide service not just to you but to future generations of rate payers,” said Jackson.

The rapid growth occurring in Seguin is helping offset the costs of expanding those services to developments in the area. Jackson says right now, the city’s impact fee schedule allows the city to pay for that expansion without placing a burden on existing ratepayers. But he says if there’s a major growth slowdown, that could change.

“You have prudently decided to use your impact fee revenue to help support the debt service payments on the growth-related debt. That means that growth is basically paying for itself but impact revenues are dependent on future growth and so we need to make sure those accounts continue to come in. If the accounts don’t come in, then that’s going to have a negative impact on your long-term rate plan. So, far, it has been coming in so let’s hope the trend continues,” said Jackon.

Much like the water and wastewater rates, the city also works with a consultant to develop its proposed electrical rates. Ramsey Cripe of Senergy made the electric rate presentation to the council during its meeting last Tuesday. Based on their study, Cripe says no major fee increases are needed on the electric side of the utility budget.

“We are recommending some rate adjustments this go around. We are looking at a dollar increase on the customer charge which is the fixed amount per month that you pay. So, if you have zero usage, you are still paying this every month on your bill. We are not going to recommend any changes to small commercial. It is recovering pretty well and then we are going to do some offsetting rate changes to the large commercial and industrial rate classes,” said Cripe.

The council unanimously approved the new water, wastewater, and electric fees on the first reading. A second and final reading would be needed before the rates could officially be charged during the city’s new fiscal year, which begins on October 1.

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