Seattle Public Utilities proposes 4.3% annual water rate increase, citing favorable bidding market and bond ratings

Seattle Public Utilities proposes 4.3% annual water rate increase, citing favorable bidding market and bond ratingsSPU's 2027-2029 water rate proposal comes in below previous strategic plan estimates, aided by competitive contractor bids that saw one major reservoir project come in 30% under budget.

SPU is proposing water rate increases of 4.3% annually for 2027, 2028, and 2029, lowering the six-year average growth to 3.4%.

The utility attributes the lower-than-expected rates to favorable bond ratings, accumulated cash from underspending, and a highly competitive bidding market.

New rate investments include bringing the Tolt water treatment operations in-house and funding capital projects like advanced metering infrastructure.

The rate structure incorporates a newly approved expansion of the Utility Discount Program, which adds 1% to the 2027 rate increase.

Seattle Public Utilities (SPU) is advancing a water rate proposal for 2027 through 2029 that falls below the utility's previous strategic business plan estimates. The proposed rate path, presented to the Seattle City Council’s Governance and Utilities Committee on July 9, 2026, sets annual water rate increases at 4.3% for each of the three years. SPU General Manager and CEO Andrew Lee noted that the proposal is lower than the 2027-2029 rate forecast previously approved in the utility's 2025-2030 Strategic Business Plan, which had projected highs of up to 6.5% by 2029. According to Lee, the utility has benefited from a newly favorable bidding market and strong bond ratings. "The competitiveness in the contracting market has gotten better for us, which has yielded lower prices," Lee told the committee. He highlighted the Bitter Lake Reservoir project, which recently received a bid approximately 30% below the engineer's estimate. Additionally, routine capital underspending has allowed the utility to accumulate cash reserves, which are being leveraged to smooth and lower the rate increases. Rates and Financial Planning Manager Maria Coe outlined that the new rates will fund several operational shifts and capital investments. Key initiatives include bringing the Tolt water treatment operations in-house, transferring annual hydrant inspections from the Seattle Fire Department to SPU, investigating land purchases in the Tolt Watershed, and rolling out advanced metering infrastructure. The rate proposal also absorbs the cost of expanding Seattle’s Utility Discount Program (UDP). Earlier in the meeting, the committee approved an ordinance to expand UDP eligibility from 70% of the state median income to 60% of the area median income, effective January 1, 2027. Coe noted that while this expansion increases the eligible population by nearly a third, it adds just 1% to the 2027 water rate increase, translating to a $0.50 monthly increase for residential customers. Overall, single-family residential customers can expect an average monthly bill increase of $2.82 in 2027. Despite population growth across the 1.6 million-person regional system, Coe noted that overall water consumption has remained stable and per capita consumption has declined over the past decade due to conservation efforts and denser housing stock.