Pleasant Hill Water and Sewer Rate Increases
By Alexander T. Holt, Contributing Writer
Connie Whitlock, Publisher & Editor
PLEASANT HILL — Pleasant Hill residents will see higher water and sewer bills after the City Council approved a new rate structure following a public hearing on the city’s Water & Sewer Rate Study.
The study, completed in September, looks at the city’s current utility finances, future expenses, and the cost of needed improvements to the water and sewer systems.
For residents, the biggest question is simple: What will this mean for my monthly bill?
Under the approved rates, water rates will increase by 6%. The sewer base charge will also increase by 6%, while the sewer charge based on water usage will increase by 38%.
For a household using 4,000 gallons of water a month, the current combined water and sewer bill is $120.57.
Under the new rates, that same bill will be $140.98 per month — an increase of $20.41, or about 17%.
The council unanimously approved Bill No. 26-35, amending the city’s fee schedule to put the new rates into effect Nov. 1.
Why is the city raising rates?
According to the study, the city is facing increasing costs to operate and maintain its utility systems, along with major improvements that will be needed in the coming years.
During the public hearing, the city’s rate consultant explained that without an increase, existing revenue will not be enough to cover the utility’s expenses and debt obligations.
“Right now our revenues will not pay our O&M and our debt service,” he told the council. “And this is not a sustainable position, obviously.”
One of the largest pressures is on the sewer side.
The consultant said the analysis separated water and sewer expenses as much as possible and found that sewer needed the larger adjustment.
“What we found is sewer is the one that really needs larger rate increases than water,” he said. “Water is in okay shape. Sewer is the one.”
A major reason is what Pleasant Hill pays Middle Big Creek for wastewater treatment. According to the presentation, the charge increased from approximately $49 to $54 per connection per month this year — an increase of more than 10%.
The consultant described Middle Big Creek as one of the city’s largest sewer expenses and said there is little reason to expect those costs to decline in the near future.
Putting more of the increase on usage
While the sewer usage rate will increase substantially, the city chose to limit the increase to the sewer base charge to 6%.
The consultant said the structure was intentional because it places more of the increase on customers who use larger amounts of water while reducing the impact on low-volume users.
“By increasing the base charge only 6%, and the volume charge getting a majority of the revenue increase necessary, it’s going to have the lowest impact on our low-cost users,” he said.
That means a customer using the minimum 1,000 gallons will see a smaller dollar increase than the average household.
During discussion before the council vote, officials clarified that the minimum combined water and sewer charge will increase from $53.70 to $60.29.
For the average customer using about 4,000 gallons per month, the increase is $20.41.
The study provided several examples of how bills will change.
Those figures represent water and sewer charges. Trash service, which also appears on city utility bills, is not included in the comparison.
The study provided several examples:
| Monthly Usage | Current Bill | Proposed Bill |
|---|---|---|
| 3,000 gallons | $98.28 | $114.06 |
| 4,000 gallons | $120.57 | $140.98 |
| 8,000 gallons | $209.73 | $248.66 |
| 10,000 gallons | $254.31 | $302.50 |
Two rate increases rolled into one
The consultant also emphasized that residents should not expect another rate increase six months from now.
“We’ve taken the rate increase that should have been done, that usually would have been done six months ago, and the rate increase that usually would be done six months from now,” he said. “We’ve merged them together.”
Under the financial plan presented to the council, another rate increase is not scheduled until April 1, 2028.
“This is basically two years of rate increases pushed together into one,” the consultant said.
Millions in improvements ahead
The study projects approximately $9.15 million in capital needs between FY2027 and FY2031.
Those needs include regular improvements to the water distribution and sewer systems as well as replacement of lead service lines.
The FY2027 plan includes approximately $171,000 for water distribution improvements and $93,000 for sewer improvements.
Lead service line replacement is projected to cost approximately $500,000 per year in FY2028, FY2029, FY2030, and FY2031.
“We have to address lead service lines,” he said. “Federal mandate: the utility is responsible for replacing any lead service in our service area.”
The city also has approximately $4.2 million in remaining voter-approved bond authorization available for utility projects. Based on the current capital plan, the consultant said the city may need to consider seeking additional bond authorization in approximately five or six years.
What happens without an increase?
The study estimates the city would have about $533,815 in reserves in FY2027 but could face a deficit of about $350,000 if no rate increases are made.
The increases are intended not only to cover expenses and debt payments but also to rebuild the utility’s fund balance.
The consultant said the city expects to draw down reserves in the near term before rebuilding them to a level that provides enough money to cover ordinary expenses.
The financial challenge, he said, is that some expenses are not discretionary.
“We have payroll there, we have to keep operating our system, we have to pay our debt service because we promised our people who lent us money we would pay it,” he said.
High-volume residential discount eliminated
The new rate structure also eliminates a discount that residential and irrigation customers previously received when their water use exceeded 30,000 gallons per month.
The consultant said there was no cost-of-service reason to charge residential customers less for water once their usage passed that threshold.
“There’s really no justification for allowing the residential and irrigation users to use more than 30,000 gallons a month and saying, ‘Oh, some of that water is even cheaper than the first 30,000,’” he said.
The discount will remain for commercial and industrial customers with high water usage.
The consultant said those customers typically use large volumes throughout the year, including during winter months, which justifies maintaining the lower high-volume rate.
Could rates come back down?
During the ordinance discussion, a Pleasant Hill resident asked whether residents would be locked into the higher rates if circumstances improved.
“Are we locked into this for a long time, like a miracle happens, and things would happen to come down?” the resident asked.
“No, we’re not,” the consultant responded.
He said refinancing the city’s debt could potentially help if interest rates fall enough to make refinancing advantageous, although those opportunities have been less common in recent years.
But he cautioned against assuming utility costs will fall substantially.
“A utility faces the same inflationary pressures as any other place,” he said.
The more realistic possibility, he said, is that future increases could be smaller than currently projected if inflation and other expenses improve.
“What we can hope for is that rates will not have to go up as much in the future as what we’re projecting,” he said.
He also cautioned against lowering rates because of a temporary improvement in finances, describing another Kansas City-area utility that reduced rates only to reverse the decrease and impose additional increases a few years later.
“Structurally, we have to continue to provide this service to the citizens forever,” he said.
How affordable are Pleasant Hill’s rates?
The study also examined the proposed bills in relation to household income.
At 4,000 gallons per month, the new bill represents approximately 1.77% of Pleasant Hill’s median household income and 3.38% of income for households at the 20th percentile.
The consultant said a commonly used affordability measure begins identifying water and sewer costs as high when they reach around 4% of household income.
The study also compared Pleasant Hill with other communities in the area. The consultant said the new rates move Pleasant Hill slightly higher in the middle of the comparison, but not to the top.
“Right now we’re kind of on the lower end of the middle, and with this increase, we’ll be still in the middle, a little more on the higher end, but not above,” he said.
He also noted that other communities are likely to increase their rates before Pleasant Hill’s next planned adjustment.
Residents will receive notice
Following the public hearing, the council unanimously approved Bill No. 26-35.
City officials said residents will receive information about the change directly on their utility bills rather than having to find it online.
“We are sending these letters out with utility bills,” a city official told the council. “It’s not just on the internet.”
The new rates take effect Nov. 1, meaning customers should begin seeing the increase reflected in bills received at the end of November.