Brittany Kelley
KYLE — Kyle residents could see a 20% increase in their water rates next year, while those outside the city limits could see as high as 77%, as determined by a Cost of Service & Rate Study.
During its June 7 workshop, Kyle City Council listened to a presentation from Perwez Moheet, director of finance, and Angie Flores, Raftelis Financial Consultants vice president, about the study completed by Raftelis Financial Consultants.
According to Moheet, phase one of the study was completed in 2024 by the same company, who is reputable for its rate studies for water and wastewater. Phase one focused on determining the cost for providing water and wastewater service to each customer class — multifamily, commercial irrigation and residential — while phase two, which was just competed, focused on three primary objectives, said Moheet: updating the cost of service model; conducting a detailed examination and analysis of the demand characteristics and cost responsibilities for each outside city customer class; and bringing the outside city customer classes up to cost.
“Once, you’ve done all that, we must develop a rate plan for the [fiscal year] 2026 that would recover the city’s cost of providing water and wastewater service to each inside city and outside city customer class,” said Moheet.
Flores began by presenting the results of the study, which she explained looks at a forecast of five years. She noted that the study process includes five steps:
1. Identify financial and pricing objects
2. Identify revenue requirements and demand projects
3. Allocate costs
4. Design rate structure
5. Assess effectiveness in addressing pricing objectives.
“Y’all are growing in leaps and bounds and so, obviously, that has to be taken into consideration as we’re doing our financial planning and as we’re doing your rate calculations. Some of the challenges that we’re seeing that have to be addressed through rates, obviously, are your increased growth and your significant capital needs, which total in the model about $694 million over that five year period,” said Flores. “Your water supply costs have also increased, due to securing more water. It’s important to have that water supply, but obviously it does add cost to your customers.”
Currently, based on the capital plan, the city would be $32 million in debt for water service and approximately $14.3 million in debt for wastewater service by 2030, Flores said, if rates do not rise.
The recommendation for all inside city limit customers is a 20% increase across the board, including commercial and multifamily homes, no matter the meter size. For example, for a 5/8 inch meter, which is standard size, said Flores, the existing charge is $42.24. So, the 20% increase would be $8.45, amounting to $50.69.
Flores explained that historically, the way the city has charged outside city limit customers is through a differential, but this time, it will be based on the demand that the outside city limit customers are putting on the city’s water system.
“The [outside city limit customers] is a much smaller class than what you have inside the city limits; however, they do peak a lot higher than your inside city limit customers. What this means is that on their highest month of usage, they’re using a much higher percentage of water than your inside city limit customers,” said Flores. “So, that’s the reason you’re seeing much higher increases.”
The minimum monthly charge is recommended to increase by 77%, bringing the standard 5/8 inch meter from $52.13 to $92.31.
Flores stated that if the rates aren’t adjusted for those outside the city limits, then those within the city will be subsidizing those costs.
Because the potential shortfall for wastewater wasn’t as great, she continued, the recommendation is lower for inside city limit customers at 6%, while a 35% increase is recommended for outside city limit customers.
“Did we take into consideration people over 65 and finding, thinking about a way we could lock in the cost they’re paying right now? Because they’re on a fixed budget,” prompted council member Robert Rizo, who noted the aging community within the city. “As we’re increasing, their dollars don’t increase. I’m just wondering what we can do as a city to maybe help mitigate some of that.”
City Manager Bryan Langley stated that the city did not come up with a separate solution for that specifically, but that the council did instill a utility assistance program at the beginning of the year that has funding. So, some of that money could potentially aid these residents.
Rizo noted that this program is only one time a year and he was looking at something monthly to be a constant help for those on fixed incomes. Langley, in response, shared that council could look into a program similar to Rizo’s description, if that is what they want.
“This will be the basis for the budget recommendations that I bring you in July,” said Langley. “So, if you have any feedback today or in the next few weeks, please share that with us and we’d be happy to try to take a look at anything that you have.”
Council will consider adoption of the rates Sept. 2 and Sept. 16. To listen to the discussion, visit bit.ly/3HK1NIc.
