SAWS slashes capital plan by $600M to preserve 30% rate hike cap

SAWS slashes capital plan by $600M to preserve 30% rate hike capThe San Antonio Water System has approved a revised Water Forward Plan that shrinks its capital programme from $3.2 billion to $2.6 billion, halving water main replacements and delaying major supply projects to avoid pushing customer bills higher.

The utility's four-year rate plan (2027-2030) maintains a 29.9% cumulative increase, but project delays have already pushed ASR expansion cost estimates from $130 million to up to $175 million.

Water main replacements were cut from 77 miles to 40 miles, and sewer main replacements were delayed by two years.

SAWS will hire a rate consultant next year to evaluate potential rate structure changes and reassess the maximum rate caps for 2029 and 2030.

The San Antonio Water System (SAWS) Board of Trustees approved a significantly scaled-back Water Forward Plan on August 4, cutting nearly $600 million from its five-year capital improvement plan (CIP) to stay within a previously negotiated rate increase cap. The revised plan shrinks the utility's $3.2 billion CIP to $2.6 billion. The cuts were necessitated after SAWS did not move forward with an amended 2026 budget, which saw its adopted 2026 capital budget slashed from $607.8 million to $258 million. To maintain a cumulative 29.9% rate increase over a new four-year period from 2027 to 2030, staff had to "backwards engineer" the CIP to fit the revenue constraints, according to Chief Financial Officer Cecilia Velasquez. The rate plan, which heads to the San Antonio City Council for consideration in October, includes a 6.9% increase in 2027, a 6.5% increase in 2028, and maximum caps of 7% and 6.6% in 2029 and 2030, respectively. Average monthly bills are projected to rise from $56.68 to $73.61 over the four years. However, the stagnant revenue ceiling means severe reductions in infrastructure delivery. Water main replacements will be reduced from a planned 77 miles to 40 miles, representing a $223 million cut. Sewer main replacements will be delayed by two years, cutting $145 million, while joint-bid governmental water and sewer projects will see funding halved, a $120 million reduction. Other casualties include the complete unfunding of an $8 million dead-end main elimination program, a two-year delay for new water mains ($15 million), and a $55 million reduction for new or planned designs at treatment facilities. The utility's Aquifer Storage and Recovery (ASR) and local Carrizo expansion projects will also be delayed by one year. Velasquez noted that the ASR expansion cost estimate has already increased from $130 million to between $150 million and $175 million due to delays and contractor availability. Chairwoman Jelynne LeBlanc Jamison expressed disappointment over the loss of infrastructure delivery, noting that the utility will have to reevaluate its goal of reducing non-revenue water by 50% by 2035 because of the halved water main replacement mileage. "We are out of the best practice business for that particular project," Jamison said. "I'll have to be honest with you, I was more excited about our original plan that was based on years of engineering planning and master plan recommendations... But it is what it is." Mayor Gina Ortiz Jones pointed out that the project delays increase the likelihood that SAWS will exceed the maximum rate caps in years three and four of the plan. To address the growing backlog and future needs, SAWS plans to solicit a rate consultant in fiscal year 2027. The consultant will evaluate potential changes to the water and wastewater rate structure, factor in community growth, and assess the utility's district cooling and recycled water enterprise centers ahead of the next capital programming cycle.