The North Texas Municipal Water District (NTMWD) has always focused on providing high quality water and dependable services at the lowest possible cost to those we serve. The District must also continue investing in system expansions to serve our growing region, upgrade and maintain older infrastructure and comply with regulations that protect public health and the environment. These key drivers are impacting water service costs across the U.S.
To meet the FY20 funding requirements for the regional water system, the Board approved a 7-cent increase (lower than previous projections) resulting in a wholesale water rate of $2.99/1,000 gallons for Member Cities. We were able to minimize the proposed increase through a rigorous budget development process which incorporates actual expected system-wide water demands (operations funding) and more certainty regarding the timing and scope of the capital program (capital funding).
To help inform city officials, staff and consumers about the funding needed to continue delivering essential regional services, NTMWD has developed a fact sheet summary of the FY20 Budget and Rates/Costs for each service. This overview of the budget and system expenditures includes details about increases and key projects by service. It also highlights the many ways we are working to manage costs from year-to-year.
Beginning in FY19, NTMWD adjusted the method of budgeting for variable expenses (chemicals, power and water purchases) to include actual projected water use rather than the previous method based on the highest possible demands using historic data. This approach worked well, and the FY20 budget for variable costs was developed using this same method.
To provide for a more accurate allocation of support services costs between all services – water, wastewater and solid waste – NTMWD conducted a thorough review using a financial consultant. Recommendations from this detailed review include improvements based on industry standards and adjusted allocation amounts. As a result, NTMWD is creating a new fund for support services outside of the regional water system (RWS) which will further improve transparency.
The review resulted in an adjustment to the allocation of support services costs, and reallocation of approximately $10 million to non-water system budgets. While this is less than 2.8% of the RWS FY19 Budget, it is an average 5.4% increase to the other systems. Recognizing that all systems already have increases projected before this adjustment, staff is recommending a five-year phase-in approach for a smooth transition to all systems.
The District continues investing in important projects to maintain reliability and plan for future needs, including the new Bois d’Arc Lake under construction in Fannin County and the future Sister Grove Regional Water Resource Recovery Facility (RWRRF) in Collin County. To date, the Texas Water Development Board has committed nearly $1.5 billion of low-interest financing for the new lake and related projects under the State Water Implementation Fund of Texas (SWIFT) program. This is anticipated to save over $230 million in interest. The District will apply for approximately $460 million in low-interest financing through the TWDB Clean Water State Revolving Fund (CWSRF) Program for the new RWRRF. This is anticipated to save approximately $100 million in interest costs.
Additionally, bond sales for capital projects across all three systems (water, wastewater and solid waste) are being timed to more closely align with expected construction progress. The combination of all these factors enables the NTMWD to request less funding to cover the costs of the capital program.
NTMWD continues to seek efficiencies and innovations to manage the costs of the capital program, operations and maintenance, and by working with the cities we serve to identify and implement effective and efficient solutions. The District currently has nearly 80 active major projects underway valued at over $2 billion. Adequate funding and resources are required to deliver these projects on time and within budget as well as to integrate into existing system operations. The proposed FY20 budget addresses these challenges and responsibilities to continue providing safe, reliable water, wastewater and solid waste services for the millions of North Texans counting on us today and in the future.
Read more about the NTMWD FY20 Budget and Rates.