Mansfield weighs rate overhaul and targeted surcharges to offset 1,000% spike in wastewater treatment costs

Mansfield weighs rate overhaul and targeted surcharges to offset 1,000% spike in wastewater treatment costsThe Texas city is proposing its first major rate restructuring since 2012, aiming to shift the burden of soaring third-party treatment surcharges onto high-strength commercial and industrial dischargers while funding a $125 million capital plan.

Third-party wastewater treatment surcharges from the Trinity River Authority (TRA) have ballooned from $128,000 in 2016 to an estimated $1.4 million today.

The city is considering a class-based surcharge program to recover costs from restaurants, grocers, and industrial users, shielding residential customers from the financial impact.

The proposed rate overhaul includes shifting multifamily customers to a per-unit charge and introducing a dedicated, steeply inclining irrigation rate to promote conservation.

The utility faces a $125 million water and wastewater capital improvement plan over the next five years, heavily reliant on new debt issuance.

The City of Mansfield, Texas, is advancing a comprehensive overhaul of its water and wastewater rate structure to address mounting capital needs and a dramatic increase in third-party wastewater treatment costs. During a June 22 work session, city staff and rate consultants presented a new cost-of-service model that would mark the city's first major rate restructuring since 2012. For the past 14 years, Mansfield has only passed through wholesale rate increases from the Tarrant Regional Water District (TRWD) and the Trinity River Authority (TRA), absorbing internal operational cost increases. However, rate consultants warned that without structural changes, the utility’s financial performance will be insufficient by fiscal year 2027, failing to meet its 1.3x debt service coverage target and depleting its 90-day reserve requirement by 2029. A primary driver of the structural deficit is a massive spike in wastewater treatment surcharges levied by TRA. According to a presentation by Marie Kroeger of InPipe Technologies, the city’s surcharges for biochemical oxygen demand (BOD) and total suspended solids (TSS) have surged from $128,000 in 2016 to an estimated $1.4 million today. This roughly 1,000% increase is attributed to both TRA raising its rates—including a recent 30% jump for BOD—and a significantly stronger waste stream generated by the city's growing commercial and industrial base. To address this, the city is evaluating a new class-based surcharge program. Rather than spreading the TRA surcharge costs across the entire customer base, the program would target the commercial and industrial dischargers responsible for the high-strength wastewater. Under the proposal, high-strength commercial users like full-service restaurants, fast-food chains, and grocers would be grouped into classes and charged a simple average rate per 1,000 gallons based on representative sampling. Industrial users would face a more rigorous monitoring and formula-based billing structure. "The benefit to doing this approach is that the residents would have no change to them," Kroeger noted, estimating that 85% of the excess load is coming from industrial dischargers and 15% from commercial entities. Beyond wastewater surcharges, the rate study proposes significant changes to water billing to encourage conservation and generate revenue for a $125 million five-year capital improvement plan. The CIP is heavily weighted toward wastewater interceptors and transmission mains to support regional growth, and will rely on new debt issuance. Key proposed changes to the water rate structure include: - **Multifamily Per-Unit Billing:** Shifting multifamily housing from a single meter-based charge to a per-unit charge, assuming a 90% occupancy rate. Consultants noted that state environmental regulators assess system capacity requirements based on individual units, making a per-unit charge more aligned with cost causation. - **Dedicated Irrigation Rates:** Separating irrigation from residential domestic meters into its own class with a four-tier inclining block structure. Each tier would see a 25% rate increase to strongly disincentivize discretionary water use. - **Industrial Flat Rates:** Moving industrial customers from an inclining block structure to a flat uniform volumetric rate above the base allowance, aiming to avoid penalizing economic development. - **Residential Tier Expansion:** Breaking the current 2,000-to-32,000-gallon residential tier into three separate blocks to provide a steeper conservation signal for high-volume users while protecting low-income customers in the base tier. Additionally, the city is eyeing cost-recovery mechanisms for its Water Resources Division, which costs $800,000 annually to operate. The division handles pretreatment, grease trap, and backflow inspections. Staff proposed implementing either a flat monthly fee—such as $25 for grease traps or $2.50 per backflow device—or a punitive, compliance-driven fee structure to fully fund the division. The city council expressed early support for the restructuring, particularly the effort to shield residential customers from industrial wastewater costs. Staff plan to bring formal rate ordinances back to the council for consideration in late July.