City Council discusses proposed 3% rate increase for water and wastewater services

The Denton Public Utilities Board convened on July 14, 2025, to discuss critical financial strategies and rate adjustments for the upcoming fiscal years, focusing on the water utility department and its implications for the community.

A significant topic of discussion was the proposed 3% rate increase for both residential and commercial water services. This increase is intended to address rising expenses, particularly in debt service related to capital projects. The board anticipates a revenue projection of $59.1 million against expenses of $62.7 million for fiscal year 2026, which will necessitate the use of reserves amounting to $3.6 million. This financial strategy aims to maintain the utility's fund balance policy targets while ensuring the continued provision of essential services.

The board emphasized the importance of balancing affordability with the need for infrastructure improvements. The discussion highlighted that the water fund is currently above its fund balance target, but as debt service increases due to ongoing projects, this balance is expected to decrease in the coming years. The projected debt service coverage ratio for 2026 is 1.13, which is below the ideal threshold of 1.25, raising concerns about future financial stability.

Additionally, the board is conducting a retail and wholesale rate study to better align rates with operational costs and community needs. This proactive approach is crucial as the city faces growing demands for water services amid ongoing development.

The meeting also touched on the broader implications of utility rate adjustments, with board members acknowledging the sensitivity required in managing electricity and water costs. The discussions underscored the necessity of maintaining reliable utility services while navigating the financial challenges posed by infrastructure demands and economic conditions.

In conclusion, the Denton Public Utilities Board's deliberations reflect a commitment to ensuring sustainable utility services for the community while addressing financial realities. The proposed rate increases and ongoing studies will play a pivotal role in shaping the future of Denton's water utility services, with the board poised to make decisions that balance fiscal responsibility with community needs.