November 2, 2013

The Board of Directors of the San Patricio Municipal Water District is preparing to adopt a budget with a proposed 2014 municipal water rate increase of 25 cents per thousand gallons.

The rate charged to the eight municipal water providers who get water from the District will be $2.89 per thousand gallons compared to the 2013 rate of $2.64.

The rate has stayed the same or increased only slightly in each year since 2008.  In some years the District is able to use reserve funds to compensate for the ups and downs of water demand in a way that allows rates to remain level or not go up as much.  This process is called rate smoothing.

The 25 cent rate increase is composed of three items:

[1] Corpus Christi raised the rate for raw water coming from the reservoir system by 3 cents per thousand gallons.

[2] The District increased its debt service coverage to 110%  in response to a negative outlook issued by Fitch Ratings service.  This resulted in a 14-cent per thousand gallon increase.

[3] In response to municipal treated water demand, the District is constructing an additional sedimentation basin at an estimated cost of $400,000.  This accounts for 10 cents of the increase.

These increases amount to a total of 27 cents per thousand gallons.  The District was able to reduce budgeted expenses to offset 2 cents of the total proposed increase.

The average household in the communities served by the District use about 8,000 gallons per month on an annual basis.  That means that the District’s rate increase will result in the customer paying about $2 more per month.

The Water District purchases water under long-term contract from the City of Corpus Christi which is the manager of the regional water supply system.  The District sells water on a wholesale basis to cities, industries and two rural water supply corporations.

Read more information on the Fitch Ratings opinion here.