San Antonio Seeks Rate Hike to Keep Sewers from 'Falling Apart'

DALLAS – Faced with a sewer system that San Antonio Mayor Julian Castro says is “falling apart,” the San Antonio Water System is proposing a rate increase of nearly 10% to help finance maintenance.

The largest part of the 9.9% increase would fund rehabilitation of the city's sewer system, replacing aging infrastructure and expanding efforts to reduce sewer spills, or sanitary sewer overflows.

It is important that we invest in our sewer system in order to reduce the number of sewer overflows in San Antonio and comply with the federal Clean Water Act," said Robert R. Puente, SAWS president and chief executive.

Replacing and upgrading sewer lines and wastewater treatment is the major component of SAWS’ current bond program, said Doug Evanson, chief financial officer for the utility.

“When you look at our capital improvement program, the largest chunk of it goes to wastewater,” Evanson said.

SAWS officials estimate that the water supply and delivery portion of the total CIP for the next 20 years will total more than $2 billion, Standard & Poor’s reports, with slightly more than $1.4 billion planned over the next five years. Of that amount, about $620 million will address water supply and delivery.

For fiscal 2012 alone, the capital improvement program totals $215.5 million, with $158.8 million funded with debt. To supplement the bonding program, SAWS increased its commercial paper program authorization in 2009 to $500 million from $350 million to help finance identified projects, though credit agreements currently available total only $350 million.

At a city council meeting Wednesday, Mayor Julián Castro said the city’s sewer problems are a result of inadequate spending to maintain the system for decades. According to SAWS, there is a spill somewhere in the city every day.

In two months last summer, SAWS has reported nearly 200 sewage spills.

By law every single spill no matter how big or small must be reported to the Environmental Protection Agency.

For a city that is in one of the worst droughts in its history, the spills represent a threat to precious water supplies.  While seeking new water supplies through a desalination project expected to be completed in 2016, SAWS has earned recognition for its aggressive conservation methods.

SAWS plans to make at least two more presentations to the San Antonio City council before a final vote on the proposed rate increase Jan. 31.

While San Antonio’s general obligation rating is triple-A, ratings on its most recent water bond issue in September were AA from S&P and Fitch Ratings, and Aa1 from Moody’s Investors Service, all with stable outlooks.

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