San Antonio signals end of rate stability as $3.2bn capital plan drives hike proposal

San Antonio signals end of rate stability as $3.2bn capital plan drives hike proposalThe San Antonio Water System Board has delayed the timeline for a proposed 2026 budget amendment and rate plan to allow deeper scrutiny of a sharp rise in capital spending driven by wastewater compliance and resiliency mandates.

CFO Doug Evanson outlined a $3.2 billion five-year capital improvement program (CIP), with the 2026 CIP alone jumping from a previously approved $258 million to a proposed $608 million.

The utility proposed an approximate 8% residential rate increase for 2026, which would see the average monthly bill rise from $60.41 to $79.47 by 2029.

Board Chair Jelynne LeBlanc Jamison requested delaying City Council consideration to April 2 to allow for stakeholder engagement and review of large-scale 2030 wastewater projects.

Significant cost drivers include a $340 million unfunded mandate for power resiliency and deferred wastewater treatment plant rehabilitation.

The San Antonio Water System (SAWS) Board of Trustees is weighing a significant shift in financial strategy, moving from a period of rate stability since 2020 to a proposed multi-year rate increase plan required to fund a $3.2 billion five-year capital improvement program (CIP). During the January 13 meeting, CFO Doug Evanson presented a proposed amendment to the 2026 budget. While a baseline budget was approved in November 2025, the amendment seeks to increase the 2026 CIP from $258 million to nearly $608 million. Evanson noted that capital requirements are projected to exceed $600 million annually for the next five years, driven primarily by $1.75 billion in wastewater needs and $1.48 billion in water delivery investments. Evanson stated that the utility has absorbed a cumulative 24.4% in Consumer Price Index cost increases over the last five years without base rate hikes—noting that a 2023 restructuring actually lowered charges for most residential customers. However, to maintain debt service coverage metrics and credit ratings, the utility proposed an approximate 8% increase for 2026. Under the projected plan, the average monthly residential bill would rise from $60.41 to $79.47 by 2029, a total increase of roughly 31.6% over four years. Despite the proposed hikes, management argued that San Antonio’s rates would remain competitive, staying below most major Texas cities and costing less than half of what a similar customer in Houston pays. Nevertheless, Evanson warned the Board, “The years of 600 plus million dollar capital improvement programs don’t end with 2026,” citing deferred wastewater treatment plant rehabilitation and the “unfunded mandate” of Senate Bill 3 resiliency requirements as primary drivers. The total cost for the resiliency program alone is estimated at $340 million. Immediate evidence of this spending was approved during the meeting, with the Board awarding a $37.3 million construction contract to J.T. Vaughn Construction, LLC for Phase 1 of the Tier IV Diesel Generator Project, alongside a $5.5 million amendment to a professional services contract with Black & Veatch Corporation for associated engineering work. The scale of the future spending prompted pushback from the Board regarding the approval timeline. Chair Jelynne LeBlanc Jamison clarified that “we have not said that this is the plan” and requested that staff target an April 2 date for City Council consideration, rather than rushing the process, to allow for more robust stakeholder engagement and Board review. Specifically, Jamison requested more detailed information on large-scale projects slated for 2030, including a $176 million “Central Stem” sewer project and $154 million in water delivery projects. “I want to understand the criticality to the overall system and the scope of work that we contemplate with those large capital projects,” Jamison said. Mayor Gina Ortiz Jones also requested a sensitivity analysis to understand the cost at which rate increases might trigger changes in customer behavior, noting the economic uncertainty facing ratepayers. “I actually prefer a shorter timeframe... so that we know that any changes that we’re doing in particular increases are the smallest that they in fact must be,” Jones said. The proposed plan assumes no bill increase for customers enrolled in the utility's “Uplift” affordability program. The Board is expected to review refined proposals and benchmark data in February.