The increasing rates are driven by the North Texas Municipal Water District, a regional water provider that sells to more than 45 municipalities and utility districts in the area.
Richardson’s water rate is increasing by 3%, the same amount as the city’s rate increase last year.
Richardson residents are not alone, as Dallas, Garland, Prosper, Plano and other area cities are also seeing water rate increases roll out in late 2024.
In Plano, officials are trying to balance the amount paid for water across its billing tiers as it approved an increase for the third year in a row. Before rates were approved in September, a new study showed users paid less than what the city pays in wholesale.
The NTMWD’s wholesale water rates increased, also for the third year in a row, in the face of an $820.3 million budget that aims to address infrastructure needs across its coverage area.
In addition to its operating budget, the district has bookmarked more than $1 billion for investment into capital improvement expenditures in fiscal year 2024-25, according to officials.
The main driver behind wholesale rate changes has been the population increase in NTMWD’s service area, NTMWD Communications Director Alex Johnson said.
Collin and Dallas Counties, which are partly served by NTMWD, are projected to have higher water demand than supply by 2030 unless the district takes action to expand and maintain its infrastructure. The trend can be seen across the state, which is projected to face a water deficit unless more is done to increase access to water, according to a 2022 Texas State Water Plan report.
“We have been making significant investments in infrastructure to ensure we can meet the demands of our growing population and its associated economic development,” Johnson said in an email.
Prosper’s rate increase, which was finalized Oct. 15, was its first since 2019. Town officials have been trying to absorb additional costs to keep water rates steady while encouraging residents to be mindful of their water usage, Prosper Finance Director Chris Landrum said.
The setup
A number of factors contribute to Richardson’s rising water and sewer rates, according to a presentation from Richardson Budget Officer Bob Clymire said.
The wholesale water cost increase from NTMWD is expected to cost the city an additional $2.2 million for next year, while sewer treatment services will cost an additional $1.2 million.
The city also rolled out a 3% merit-based wage increase for water and wastewater staff as part of its new budget, and city documents also cite an “unfunded EPA mandate related to the inspection of the system for lead and copper piping” as an additional cost pressure.
With the update, Richardson residents using the same amount of water 2023 and 2024 would pay a minimum of $0.21 more monthly, and a maximum of $0.93 more, depending on how much they used.
Average residential customers can expect to see their annual water bill increase by $29, according to a budget presentation.
In 2024, Plano hired NewGen Strategies and Solutions to conduct a five-year forecast of water rates. NewGen delivered results of the study in August, which showed water users in the 1,001-5,000 gallon range were not paying a fair share for water, Budget Director Karen Rhodes-Whitley said.
35% of water bills issued between July 2023-2024 charged for less than 5,000 gallons, according to the study.
Plano officials intend to gradually increase the tier’s cost for water over the next three years until it’s in line with NTMWD’s wholesale charges.
Before Prosper’s Oct. 15 rate increase, which raised residents’ prices by 6.35%, the last two times Prosper changed its water rates were in late 2019 and late 2012, Landrum said.
The town expects to pay for $13.6 million worth of water in 2025, Landrum said.
“Us purchasing water makes up about half of the cost of our utility fund,” he said.
Prosper tried to absorb the higher costs where it could but did have to pass on some of it to residents, he said.
Prosper residents can keep their bill lower by conserving water and only watering their lawns on the assigned days, Landrum said.
The framework
NTMWD serves 13 member cities in the North Texas area, including Plano and Richardson. Member cities play a unique role in NTMWD’s regional water system by pledging to cover the cost of the system, Johnson said.
NTMWD also provides water for 34 customer cities and utility districts. Customer cities, including Prosper, pay for water at an extra five cents per 1,000 gallons.
Wholesale water rates have increased for the last three fiscal years in a row. More than half of fees collected via wholesale water rates are reserved for covering capital project costs and maintenance.
The Texas State Water Plan recommends more than $10 billion in projects that NTMWD can pursue in order to meet future water demand.
Explaining the role
NTMWD plans to invest more than $5 billion over the next 10 years to meet the increasing demands of a growing population, Johnson said. In FY 2024-25 alone, NTMWD’s budget includes $1.1 billion planned for capital and maintenance projects.
“Rapid growth in our service area continues to drive our infrastructure investments,” Johnson said.
Put in perspective
NTMWD’s efforts to prepare for future population can be seen across the state. Demand across Texas is projected to outpace existing supply by 2030, according to the Texas State Water Plan.
Texas faces two key challenges regarding water, said Jeremy Mazur, natural resources and infrastructure policy director for Texas 2036.
First, the state is projected to face a water supply deficit of up to 6.9 million acre-feet by 2070, he said. Second, water and wastewater infrastructure across the state is using and becoming a liability for the communities it serves, he said.
“The issue is that even though we have these financial assistance programs that have been approved by the legislature and approved by the state, they’re going to fall short in terms of what we ultimately need to spend in the long term on these water infrastructure challenges,” Mazur said.
One more thing
The NTMWD’s board of directors adopted a new wholesale water rate for customer cities during a Nov. 21 meeting. It’s the first time the wholesale rate has been changed for customer cities since 1970.
The NTMWD plans to phase in a new customer contract template that will take effect in August 2028. Under the new wholesale rate, customer cities could pay as much as 10 cents more than member cities.
Jenna Covington, executive director and general manager for NTMWD, said the wholesale rate for customer cities had been a topic of discussion for decades. Officials have spent time over the last few years discussing it with customer cities before implementing the change.
“I am grateful for the spirit of cooperation and regionalism that has been on display as we undertook that process,” she said.
Reporter Alex Reece contributed to this story.
