To finance the projects, a three-year rate increase plan went into effect Nov. 1 and gave NBU the green light to increase water, electric and sewer rates each year through fiscal year 2022-23.
NBU will focus on repairing aging infrastructure and installing new systems, and the company is expectedto invest more than $563 million into the improvements, NBU CEO Ian Taylor said.
“Our community has ranked among the top three fastest-growing cities in the country for the last nine years,” Taylor said. “It’s impacted all three of our lines of business: electric, water and wastewater.”
On top of repairing the area’s infrastructure, one of the biggest challenges NBU faces is justifying to its customers the rate increases, which lead directly to improvements the company says are essential. For many residents of New Braunfels, the cost hikes sparked frustration over climbing utility bills and confusion over how to keep costs down.
“It’s already very expensive to be in business in New Braunfels, and then this just kind of makes it harder,” said Veronica DeReu, owner of The Industry Salon & Studios in New Braunfels.
DeReu, who opened her salon last July, saw significant increases in her electricity bill during the summer despite her efforts to conserve power.
She said she worries that the increasing cost of utilities will make it difficult for residents and business owners to budget and plan monthly expenses.
“If they’re going to raise these rates, I believe we’re owed an explanation as to where they’re going or how we can avoid a lot of extra charges,” DeReu said.
Aging infrastructure and a growing city
The population of New Braunfels increased by 46.99%, from 61,712 residents in 2014 to 90,710 residents in 2019—the most recent year of data available from the U.S. Census Bureau.
The rapid growth has put many NBU systems out of compliance with state requirements, Taylor said, as the infrastructure capacity could not keep pace with demand for service.
“The growth of this consuming capacity in our water and wastewater system is at twice the normal rate,” he said. “That has lowered our system’s capacity to the point where we’re out of compliance with state and federal regulations because the growth has happened literally faster than we can build the projects.”
While the existing electricity system is equipped to handle the current population and has capacity to cover future growth, the water and wastewater systems are strained and not in compliance with Texas Commission on Environmental Quality capacity regulations, Taylor said.
To avoid potential fines, NBU received approval from the TCEQ to operate under decreased capacity while new pumping stations and water storage solutions are constructed.
In September, the new $58 million Gruene Water Reclamation Facility began operating, bringing NBU closer to regulatory compliance.
Funding to construct several groundwater storage tanks, a new pump station and additional water lines are included in the company’s five-year capital improvement projects plan, though completion dates have yet to be announced.
“While we are building a historic amount of capital at a historic pace, it will take another two to three years before larger projects come online and bring us back into regulatory compliance and add reserve capacity,” Taylor said.
Many long-time residents have raised concerns that existing customers are shouldering the burden of new developments, according to Lee Edwards, a real estate developer who sits on the city’s planning and zoning commission.
“When people get the assumption that it’s all the new growth that is causing the rate increases, that’s not purely true,” Edwards said. “New developments pay for all new infrastructure, except for tying into the existing supply, and NBU is responsible for providing the necessary water.”
Though the city’s rapid growth requires new systems to handle increased capacity, Gretchen Reuwer, director of electric services and compliance for NBU, said maintaining and replacing aging infrastructure is also critical to providing consistent services.
“We build systems that last 30, 40, 50 years and beyond,” Reuwer said. “But at some point in time, you know, it’s got to be replaced.”
Projects to replace and update systems throughout the city must be planned to ensure materials are available and the systems do not reach a breaking point before work is completed, Reuwer said.
The $31.6 million North Kuehler 30-, 33- and 42-inch interceptor upgrade will replace existing sewer lines, and work is expected to be completed in fall 2021.
Weighing the need for upgrades with available funding is a balancing act, Taylor said, and projects are scheduled years in advance to prepare for their undertaking.
“We’re not building these projects because we want to, we’re building them because we must,” Taylor said. “The purpose of these projects is to ensure that we’re protecting public health and that these essential services that the community relies on remain resilient.”
Finding the funds
As a municipally owned, nonprofit utility, NBU is primarily funded through the issuance of debt, investment fund balances, consumer revenue, impact fees and third-party funding sources.
According to NBU, rising purchasing costs for power and water as well as expenses related to improvement projects and upgrades contributed to the creation of the three-year rate increase plan.
Water rates will increase by 7% in FY 2020-21, according to information from NBU, and wastewater rates will increase by 16.5% during the same year.
Electricity rates for delivery and customer charges will increase by 5% in FY 2021-22, and customers can expect overall 1.3% increases in their electric bills for FY 2021-22.
In addition to increased rates, the water supply fee charged by 1,000 gallons of usage will increase by $1.05 in FY 2020-21.
“Our rates are designed so that costs are allocated to those customers that are driving the cost,” Taylor said. “So, in other words, the rate for water increases the more water you use. If you’re only using water for essential use like preparing food or bathing, drinking, washing dishes—that kind of thing—then your bill won’t change much.”
In an effort to mitigate costs for customers, those who use 7,500 gallons of water or less each month will not have to pay a water supply fee, Taylor said.
In March the company plans to introduce the Comprehensive Utility Bill Management Program as a tool to assist customers in understanding their bill.
hreshold alerts and more, according to Dawn Schriewer, NBU’s chief financial officer.
During the summer, DeReu worked to keep the utility bill for her 1,500-square-foot salon low by turning off her air conditioner every night and subleasing additional space in her building to tenants that helped shoulder the cost.
“Even with keeping our air conditioner up to date and taking care of everything the way we should, it was still several hundred dollars per bill per month,” she said. “It would be nice if NBU came out with some kind of directions as to how to keep your bill down.”
As new residential and commercial developments expand the footprint of New Braunfels, the existing infrastructure will continue to strain under the growing demand, Taylor said.
Once the larger projects are complete and systems are brought back into compliance, Taylor expects the capital improvements budget to decrease and rates to stabilize.
“With these projects and these additional water supply costs, that necessitates a change in rates,” Taylor said. “We’re not changing rates because we want to, we’re changing the rates because we have to.”