The Amarillo City Council on Tuesday reviewed a comprehensive water and wastewater rate study aimed at guiding future funding decisions for major infrastructure upgrades, including planned wastewater treatment facility projects expected to cost up to $1.5 billion.
The study was conducted by NewGen Strategies and Solutions and presented by company CEO Chris Ekrut. The analysis focused on whether current utility rates are sufficient to support both ongoing operations and the significant capital investments required to address aging infrastructure at the Hollywood and River Road wastewater treatment plants. Both facilities are nearing or exceeding their intended service capacity, prompting the city to plan extensive upgrades or replacements.
City officials emphasized that the $1.5 billion figure represents a maximum planning estimate used for financial modeling while engineering work is still underway. Assistant City Manager Donny Hooper noted that the city is actively working to reduce overall project costs during the design phase, which is expected to continue over the coming months. The city anticipates selecting an engineering firm by June to further refine cost estimates and project scope.
A key component of the financial study is the use of long-term debt financing to support construction. The analysis incorporated the concept of intergenerational cost sharing, meaning the expense of large infrastructure projects would be distributed across current and future ratepayers who will benefit from the improvements over time.
The study also examined external financial pressures affecting water system costs. One major factor is the anticipated increase in water supply expenses from the Canadian River Municipal Water Authority (CRMWA). Costs associated with CRMWA water are projected to rise significantly over the next decade, increasing from approximately $14.25 million annually to more than $39 million by 2036.
In addition, the analysis accounted for a new water supply agreement involving Fermi America. Under the arrangement, Fermi will pay a rate equivalent to twice the city’s standard charge for comparable water usage within city limits. This agreement is expected to generate approximately $5.61 million in net revenue for the city by 2027, partially offsetting rising system costs.
Based on projected expenses and revenues, NewGen determined that an average annual utility rate increase of 8.4% may be required to maintain financial stability and fund the planned infrastructure investments. However, officials stressed that this figure is preliminary and subject to change as more precise engineering and cost data becomes available. The study also noted that the proposed increase would need to be distributed across residential, commercial, and industrial customer classes through a detailed rate design process still under development.
During the presentation, comparative data showed that Amarillo currently has one of the lowest combined water and wastewater bills among similarly sized Texas cities. The average monthly bill in Amarillo stands at $65.36, significantly below cities such as Lubbock at $96.14 and Mesquite at $168.53. Under the proposed 8.4% increase scenario, the average Amarillo customer bill would rise by roughly $5.50 per month.
City leadership also clarified that recent annual rate adjustments of approximately 5% would not be compounded on top of the proposed increase. Instead, any new adjustment would be incremental beyond existing projections.
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