DC Water grapples with Potomac Interceptor collapse alongside $9.7B capital plan approval

DC Water grapples with Potomac Interceptor collapse alongside $9.7B capital plan approvalA catastrophic sanitary sewer line breakdown has forced DC Water to divert resources and navigate complex FEMA reimbursement tracking, even as the board pushes forward with a $9.69 billion ten-year infrastructure overhaul.

The January 2026 collapse of the Potomac Interceptor requires an estimated $15 million to $20 million for emergency repairs and environmental remediation.

The utility expects FEMA to cover approximately 75% of the repair costs, prompting board members to demand strict cost-code tracking across jurisdictions.

The board unanimously approved a $9.69 billion Capital Improvement Program (CIP) for FY26-FY35, funded heavily by $3.3 billion in borrowing and $3.1 billion in PAYGO.

To support growing capital and operating costs, the board approved retail rate increases that will raise the average residential bill by 6.6% in FY27 and 5.3% in FY28.

The ongoing emergency response has sidelined DC Water's strategic efforts to acquire the Washington Aqueduct.

DC Water is navigating the operational and financial fallout of what its leadership described as the "most significant crisis" the authority has faced in two decades following the catastrophic collapse of the Potomac Interceptor sanitary sewer line. During a March 5, 2026, board meeting, General Manager David Gaddis detailed the extensive emergency response to the January 19 collapse near the Clara Barton Parkway. The utility has deployed more than a dozen bypass pumps and a steel bulkhead gate to stop wastewater from flowing into the damaged pipe and the Potomac River. The emergency response has required moving nearly four tons of material daily in subfreezing temperatures. The crisis has triggered intense board scrutiny over cost tracking and infrastructure oversight. Vice President of Engineering Dr. Wan estimated the Potomac Interceptor repair and environmental remediation will cost between $15 million and $20 million. The utility expects the Federal Emergency Management Agency (FEMA) to cover approximately 75% of the repair costs, contingent on a pending emergency declaration request submitted by the District of Columbia. Board member Jennifer Macedonia pressed staff for a detailed accounting of expenditures, emphasizing the need for strict cost tracking to ensure proper FEMA reimbursement across multiple jurisdictions. Interim Chief Financial Officer Lola Oyemi confirmed that the utility has engaged a consultant and established an internal task force to track costs in coordination with the District's Homeland Security Emergency Management Agency. Tensions flared over the disclosure of a 2024 inspection report and its comparison to a 2021 assessment of the collapsed interceptor. Macedonia argued that the board has a "fiduciary duty to ensure full disclosure" to the public. However, Chair Unique Morris-Hughes and utility counsel directed the discussion of the inspection report to an executive session, citing legal advice, though a public release of the report was scheduled for later that afternoon. The sheer scale of the Potomac Interceptor emergency has also forced DC Water to sideline other major strategic initiatives. Board member Christopher Herrington expressed frustration over the lack of progress on the utility's efforts to acquire the Washington Aqueduct. Gaddis and Morris-Hughes defended the delay, stating that staff must remain singularly focused on the interceptor repairs. Despite the ongoing crisis, the board advanced its broader long-term infrastructure planning. The board approved a $9.69 billion ten-year Capital Improvement Program (CIP) for fiscal years 2026 through 2035. The massive capital plan will be funded through $3.3 billion in borrowing, $3.1 billion in pay-as-you-go (PAYGO) funds, $2.1 billion from wholesale customers, and $413 million in federal funds. Priority investments include large sewer and water main rehabilitation, the Lead-Free DC initiative, and the DC Clean Rivers Program. In addition to the overarching CIP, the board approved several major contracts to execute the plan. These included a $212 million progressive design-build contract to replace 45 miles of small-diameter water mains over three years, a $50 million supplemental agreement for the Lead-Free DC program to expand service line replacements from 28,000 to 42,000, and a $46.2 million Anacostia Area Sewer Rehabilitation contract. To support the growing capital investment needs and rising operating costs, the board also approved proposed retail water and sewer rate increases. An independent review by Amaloch Consulting affirmed the rate model, which will increase the average household residential bill by 6.6% in FY27 and 5.3% in FY28. Debt service is projected to consume up to 34.1% of total disbursements by FY28 as the utility finances its extensive infrastructure overhaul.