San Antonio unveils $3.2 billion five-year capex plan as rate pressures mount

San Antonio unveils $3.2 billion five-year capex plan as rate pressures mountThe Texas utility is forecasting a 40% increase in capital spending compared to a decade ago, driven by wastewater treatment rehabilitation, grid resiliency, and aging pipe replacement, with consultants recommending double-digit rate revenue increases.

SAWS projects $3.2 billion in capital needs for 2026–2030, a sharp rise from the $2 billion spent in 2016–2020.

Consultant Carollo Engineers recommends ~30% water and >35% wastewater rate revenue increases over the five-year period.

Major drivers include $340 million for SB3 resiliency generators and significant rehabilitation at the Leon Creek and Clouse Water Recycling Centers.

A proposed 2026 budget amendment seeks to generate approximately $39 million in additional operating revenues.

22% of the utility's water mains are over 50 years old, necessitating a heavy focus on basic renewal.

San Antonio Water System (SAWS) executives laid out a comprehensive $3.2 billion capital improvement program (CIP) for the 2026–2030 period during a February 3 board meeting, signaling a pivot toward heavy investment in aging treatment facilities and grid resiliency that will necessitate substantial rate adjustments. Doug Evanson, the utility's CFO, presented the data during a public hearing on a proposed 2026 budget amendment. He highlighted that the five-year capital forecast represents a more than 40 percent increase over the $2 billion spent during the 2016–2020 cycle. The proposed amendment for 2026 alone is expected to generate approximately $39 million in additional operating revenues to offset rising operations, maintenance, and debt service costs. "We now want to take a little closer look with regards to the primary driver of these heightened CIP levels," Evanson told the Board, pointing to a convergence of inflation, supply chain disruptions, and regulatory mandates. **Infrastructure Drivers** A significant portion of the spending is allocated to wastewater treatment rehabilitation. Evanson outlined major projects slated for 2026 and 2027, including $85 million for hydraulic and solids improvements at the Leon Creek Water Recycling Center (WRC) and nearly $254 million combined for biosolids upgrades and rehabilitation at the Steven M. Clouse WRC. The utility noted that delaying these projects poses risks of permit violations and equipment failure. Resiliency remains a high-cost priority following Winter Storm Uri. The utility is investing more than $340 million total to install backup power generators across its system to comply with Senate Bill 3 (SB3). Specific tranches of this spending include approximately $60 million in 2027 and $57 million in 2028. Basic infrastructure renewal—described by Evanson as "blocking and tackling"—accounts for a massive share of the budget. Approximately 22 percent of SAWS’ 8,000 miles of water mains are over 50 years old. On the wastewater side, nearly 400 miles of mains have been identified for replacement due to condition. **Rate Implications** The increased capital requirements will drive rates higher. Evanson cited findings from a rate study by Carollo Engineers, which concluded that current charges are insufficient to meet identified revenue requirements. The consultants recommend a cumulative increase of approximately 30 percent in potable water rate revenue and more than 35 percent in wastewater rate revenue over the 2026–2030 window. "We have targeted at least 1.75 times [debt coverage]," Evanson noted, adding that while the utility has maintained strong coverage, ratios have trended downward due to the lack of recent rate increases. **Board Reaction** The scale of the spending drew questions regarding long-term sustainability and development policies. Mayor Jones expressed concern over the "sprawling development" driving infrastructure needs, noting that SAWS maintains more miles of mains than cities with much larger populations, such as Houston. "I want to make sure that we spend time... helping people understand not just the cost, but look at how much infrastructure we have that we now have to maintain as a result of development practices," Mayor Jones stated. **Drought Context** The financial planning occurs against a backdrop of extreme drought. Staff presented data showing current conditions tracking closely with the historic drought of the 1950s. To mitigate long-term supply risks, the CIP includes an expansion of the Aquifer Storage and Recovery (ASR) plant in 2028. Failure to execute this expansion could leave the utility unable to meet projected supply gaps during drought conditions in the mid-2030s.