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San Antonio Water System customers will see their bills rise again next year, this time to pay for water that will start flowing from the Vista Ridge pipeline.
On Tuesday, the San Antonio Water System’s board of trustees unanimously approved a 52.4 percent increase to the water supply fee component of SAWS’ customers’ bill starting Jan. 1, 2020. That will cause the average residential customer’s monthly bill to rise 9.9 percent, from $68.60 to $75.17.
For comparison purposes, the utility estimates its average user consumes 7,092 gallons of water per month and disposes of 5,668 gallons of wastewater per month. SAWS has eight tiers of per-volume rates for residential customers, with the price per gallon going up the more water a customer uses.
The rate increase will generate an additional $82.1 million in operating revenue in 2020, SAWS controller Cecilia Velasquez said, with $81 million in its operating budget set to go to water payments for Vista Ridge.
At an Oct. 31 City Council briefing, SAWS President and CEO Robert Puente told council members the municipally owned water and sewer utility has done everything it could to keep rate increases as low as possible, even after City Council approved five years’ worth of rate increases in 2015.
“It should be noted that the largest adjustment was always scheduled to take effect in 2020, coinciding with the delivery of water,” Puente said. “Even though council authorized five years of maximum increases, we have worked diligently to hold down each one of those increases.”
In April 2020, the more than 140-mile pipeline will begin delivering groundwater from aquifers below Burleson and Milam counties east of Austin. Under the contract, SAWS must purchase all the water that shows up in its tanks, up to 16.3 billion gallons, or 50,000 acre-feet, in a year. The pipeline is set to become San Antonio’s largest water supply outside of its mainstay, the Edwards Aquifer.
SAWS officials have said San Antonio doesn’t need all 50,000 acre-feet right away. For years, the utility has been looking to sell up to 15,000 acre-feet per year to communities along the Interstate 35 corridor. So far, it’s had no takers, partly because many of those communities are focused on
On Tuesday, the rate increase was supported by two trustees whose critical stances on Vista Ridge figured prominently in their political rise.
Mayor Ron Nirenberg has tried to hold SAWS accountable on the costs associated with Vista Ridge, while still voting for the pipeline at every opportunity. At last week’s briefing, Nirenberg said the vote in 2015 was “based around a deal that would provide a significant source of water to diversify our portfolio and require a financial structure that necessitated long-term confidence from the financiers.”
SAWS Trustee Amy Hardberger, a St. Mary’s University associate provost and longtime critic of Vista Ridge, also cast her vote for the 2020 budget and rate increases on Tuesday. In 2014, Hardberger wrote an op-ed that warned of the risks of bringing in a project to ensure abundant water even during drought times.
“The 50,000 acre-feet of water that the Vista Ridge pipeline will deliver to the city every year is for drought,” Hardberger wrote five years ago. “The project aims to provide abundant, not just adequate, water during a drought of record, should one occur. This may sound like a great idea, except the city is obligated to pay for all acceptable water that arrives, whether it’s needed or not – and projections show that it isn’t.”
On Tuesday, Hardberger told the Rivard Report that the political process on whether to go through with Vista Ridge ended years ago with unanimous or nearly unanimous votes in favor.
“Now, the reality is that we are contractually obligated to that project, and part of that is that we have to ensure that we pay our part so we are not in legal breach,” Hardberger said. “At this stage of the game, being in breach of the contract is not a prudent course.”
Hardberger added that the conversation has shifted to the structure of SAWS rates, its pricing for low-income customers, and selling water outside of San Antonio to alleviate the burden on SAWS customers.
Alan Montemayor, a member of the executive committee of the Alamo Group of the Sierra Club, told SAWS officials that rising bills, combined with SAWS’ continued calls for conservation, are leading to increased outcries from customers.
“We’re really putting the burden on the citizens, and the citizens are starting to complain,” Montemayor said, referring to a discussion about the rate hike he had seen among his neighbors on the Nextdoor social media platform. “People are getting upset. Your price message about water is starting to take effect. Maybe that’s a good thing … but effectively you’re painting yourself into a corner with all the actions you’ve done.”
The Vista Ridge contract requires SAWS to pay around $220,000 per day to the group of private companies that built and will operate the pipeline for 30 years. Last year, those companies announced Canadian utility company EPCOR would operate the pipeline over that term.
In 2016, Kansas City-based Garney Construction took over a majority stake in the construction line from a branch of Abengoa, a Spanish water and renewable energy conglomerate that was beset by financial troubles.
Since Garney’s takeover, SAWS officials have said that construction has proceeded on schedule. However, Vista Ridge remains a controversial project in San Antonio, even four years after the unanimous City Council vote that paved the way for the 2020 rate hike.
In November 2015, City Council approved increases that would take the average SAWS customers’ bill up 50 percent over five years. The increases would pay for Vista Ridge and the infrastructure needed to connect it to the system, work to repair SAWS’ undersized and leaking sewage system ahead of a 2023 deadline, and a desalination plant that opened in 2017, among other needs.
At the Oct. 31 City Council briefing, Andrea Beymer, SAWS vice president of engineering and construction, told council members the cost to connect Vista Ridge will likely to be $175 million to $185 million instead of the $130 million estimated in 2015 because of “labor issues, electrical issues” and expensive tunneling contracts.
While SAWS will collect impact fees from developers to offset the cost of Vista Ridge, the water utility chose not to pass along those savings on to its customers in the form of smaller rate increases. In May, City Council members approved impact fees charged to developers that would lead SAWS to collect $383 million from developers over 10 years to offset the $2.8 billion cost to SAWS customers of Vista Ridge.
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However, SAWS officials in the end asked for the full 9.9 percent. SAWS Chief Financial Officer Doug Evanson told the Rivard Report in September that SAWS need more revenue next year because its customers are conserving water even in dry times.
Councilman John Courage (D9), who was not on the council for the 2015 vote, has been asking why SAWS has recently been building up a stockpile of cash. The utility is expected to end 2019 with 479 days cash on hand, according to a City report.
SAWS officials have said they’ve been accumulating that cash to pay for about half of the utility’s largest-ever capital improvements budget of $609 million in 2020, with some of its most major sewer repairs scheduled for next year. The number of days’ cash on hand is set to decrease to 378 in 2020 and 295 in 2021, slightly below SAWS board’s target of at least 300 days.
“I’m concerned about your cash on hand, and you know that,” Courage told Puente at the briefing last week. If, Courage asked, SAWS ends up with more cash on hand over the next two years than it’s anticipating, “are you willing to go back and look at the rates and then lower rates to compensate for that?”
Puente responded that “we did a purposeful policy decision to raise days cash on hand” knowing that they wanted to borrow less to pay for improvements.
“All it is, is a philosophical difference between what you think we should be doing and what we’re doing,” Puente told Courage.
Though the 2020 rates are a done deal, the future structure of SAWS rates remains an open question.
Since September, members of SAWS’ Rate Advisory Committee have been meeting at least twice a month to make recommendations on how the utility should structure its rates. SAWS’ last rate restructuring came in 2015, when City Council approved them along with the increases.
At their next meeting, members are expected to rank the following priorities they believe SAWS should consider most important when setting rates. Those priorities are affordability, conservation, cost-of-service-based allocations, drought management, ease of implementing new rates, economic development, minimization of customer impacts, revenue/rate stability, and the simplicity of understanding and updating them.
Rate advisory committee meetings are open to the public and include a public comment period at the start of each meeting. The next one is tentatively scheduled for Nov. 12 from 6 p.m. to 8 p.m. at SAWS headquarters at 2800 U.S. Highway 281.