With renegotiated water contract, city of Hutto will save around $13 million

Hutto City Council approved new terms to a contract with Manville Water Supply Corp. April 4.

Hutto City Council approved new terms to a contract with Manville Water Supply Corp. April 4.

Editor's note: this story has been updated to include the number of city of Hutto water users.

All city of Hutto water users---approximately 5,400 clients---will see a credit on their water bills next month. The "one month holiday" will amount to approximately an 8.3% reduction in their overall water bill for the year.

This follows action on April 4 as Hutto City Council voted to renegotiated a contract with Manville Water Supply Corp., which daily provides hundreds of thousands of gallons of water to residents and businesses.

"This will transmit savings directly to our residents," Hutto City Manager Odis Jones told Community Impact Newspaper after the meeting.

Council's action Thursday night is the latest in a series of steps to relieve high water costs, Jones said. Hutto in November 2017 purchased the city’s water system from Heart of Texas Water Suppliers for $59 million. Jones also pointed to more growth in the city---both residential and commercial---helping to offset high water costs.

In the early 2000s, the city entered into contracts with suppliers—which at that time included the city of Taylor, Heart of Texas Water Suppliers and Manville Water Supply Corp. Back then, Hutto’s population was growing by 40 percent to 80 percent per year. City leaders contracted water supplies to sustain the predicted future population of the city. However, when growth stalled in 2008 and 2009, residents had to shoulder the extra costs of water no one needed.

One such contract—signed in May 2003—was a 40-year contract with Manville that would have amounted to nearly $31 million over the life of the agreement, Michel Sorrell, the city’s chief financial officer, said at the meeting. Terms called for the city to pay for a minimum of 500,000 gallons per day, at a price of $4.20 per thousand gallons. The use of more than 500,000 gallons per day incurred a 20% premium.

The new contract is shorter in scope—15 years—and includes an 'as needed' component. Hutto will now take a reserve capacity of 200,000 gallons per day, compared to paying for a minimum of 500,000 a day. If needed, the city may take up to 820,000 gallons per day.

The new terms call for a lower cost as well—$3.50 per thousand gallons instead of the previous $4.20 rate.

With the new agreement the city saves approximately $516,500 per year, Sorrell said. Over the life of the original contract, the new terms save the city around $13 million.

The city also gains the flexibility to use more water at the regular rate instead of the 20% premium as required in the prior contract. This ensures that growth for the area is supplied with water, a much needed commodity, Sorrell said.

Another component of the new agreement is Hutto's designation as a "most favored nation." This means Hutto will always receive the lowest rates Manville is able to provide. No other customer will receive a better rate, Sorrell said.

"I'm super glad that we're able to do the one-month holiday," said Mayor Pro Tem Tom Hines. "At some point in the near future, we're going to have to start thinking about building another water treatment plant. We have to think 10, 15, 20 years down the road."


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