Possible utility rate increases on the horizon
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Cape Coral utility customers are looking at possible continuing increases in water and sewer rates, according to a revenue sufficiency analysis to be presented to Cape Coral City Council on Wednesday.
Stantec will make the presentation, which will highlight a rate study background – annual revenue sufficiency reviews, borrowing, increasing cost requirements and key drivers – as well as capital project funding, financial sustainability and operating costs.
According to the presentation’s Revenue Sufficiency Analysis of the city’s Utility’s Department, which begins with the existing phase-in of rate adjustments and includes a recommendation to look at irrigation rates as a way to possibly off-set increases to core service rates:
▪ The utility requires water and sewer rate adjustments of 11%, which started in FY 2025, until FY 2027, and an annual rate indexing adjustment of 5% beginning in FY 2028 to satisfy its projected expenditure requirements and achieve targeted reserve and debt service coverage levels.
▪ The city should consider review of and increases to its irrigation rates in future rate adjustment plans which can mitigate the level of water and sewer rate adjustments.
The rate adjustment conclusions presented are predicated upon inclusion of expansions underway or planned — the North 1, North 3, North 4, North 5, and North 6 UEP areas — as well as the Utility’s FY 2024 through FY 2030 Capital Improvement Plan.
The major capital improvement plan for fiscal year 2027 through fiscal year 2031, which shows a $204.5 million increase, also will be addressed at the council workshop on Wednesday.
Utility construction materials also are projected to see an increase ranging from 24% for electrical machinery and equipment to 49% for fabricated pipe and pipe fittings.
The presentation provides two financing options – traditional fixed rate bonds for major projects beginning in 2027 and the second option of commercial paper plus fixed rate bonds to utilize capital projects for major projects during construction with long-term takeout once spending is complete.
The first option requires an increase of 11%, annual indexing of 5% through fiscal year 2032 and the second option requires annual increase of 5% through fiscal year 2032.
This plan of rate adjustments would need to be recalibrated if the utility identifies additional CIP, additional UEP areas, or the UEP was discontinued, expedited, or adjusted materially from that presented herein, the report states.
▪ The utility should continue to perform annual revenue sufficiency updates so that additional or revised information regarding the timing and cost of the CIP resulting from the Utility’s master plan, UEP costs and timing, changes to the Utility’s betterment fee ordinance and associated policies. In addition, customer growth, water demands, revenue, and O&M expenses may be incorporated into the determination of rate increases that would be necessary to allow the Utility to meet its financial requirements. Advanced planning will play a prominent role in avoiding significant future rate impacts to the Utility’s customers resulting from these variables occurring differently than currently projected.
Other items on Wednesday’s workshop agenda include environmental recreational programs and the fiscal year 2025 financial audit by Mauldin and Jenkins.
The meeting is open to the public.
The meeting will begin at 9 a.m. Wednesday, April 22, in City Council chambers, 1015 Cultural Park Blvd.
To reach MEGHAN BRADBURY, please email news@breezenewspapers.com