The city of Amarillo is planning to build a $1.5 billion wastewater treatment plant (WWTP). However, with the project’s steep cost, calculated inflation and other critical water projects on the rise, the city council is considering solutions laid out in a water and wastewater rate study to secure adequate funding over the coming years.
The study indicated that annual debt service could increase by 238% by Fiscal Year 2036. Utility expenses expected to rise to $257.2 million by FY 2036 while revenues may only reach $129.5 million. The shortfall highlights the disparity between what the city needs to advance critical water projects and where its current financial path takes its budget.
To meet the anticipated $1.8 billion cost needed to fully fund both the WWTP and other water initiatives included in the city’s Capital Improvement Plan (CIP), the study recommended a gradual rate adjustment of 8.37%. These projects largely center around efforts to address aging infrastructure at the city’s two existing WWTPs, with both nearing or exceeding their intended service capacity.
While Amarillo authorities continue to reduce overall project costs, the city will need to lean on long-term debt financing to break ground on these initiatives. The proposed 8.37% is a preliminary estimate and may be changed. Once it or a similar rate is implemented, the city will apply the increase across residential, commercial and industrial customer classes. The search for finding the correct rate plan is scheduled to begin in June.
There are two other major factors at play in the city’s 10-year water cost projection. The first concerns the city’s agreement with the Canadian River Municipal Water Authority (CRMWA). Amarillo currently purchases water supply wholesale from the authority and pays a share of its annual debt service. However, the annual cost is expected to go up over the next decade, increasing from $14.3 million in FY 2026 to $39.5 million by FY 2036.
The second factor accounts for a water supply agreement with a next-generation power company. The company will pay a rate equal to double the city’s standard charge for water usage within city limits. This will provide a $5.6 million net revenue by FY 2027, supporting both the city’s water project ambitions and the power company’s electric grid plans.
The city council agreed to continue the study. The company conducting the study will return at a later date with an updated presentation.
Photo by Joseph Russo from Pexels
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