OWASA Approves 7% Rate Increase for Fiscal Year 2025-26

COMMUNITY NEWS

By Adam Powell
Correspondent

CHAPEL HILL – On June 26, the OWASA (Orange Water and Sewer Authority) Board of Directors discussed the approval of rates, fees, and charges for fiscal year 2025-26.

Following a public hearing held on June 12, the Board of Directors directed staff to present for adoption at the June 26 session a budget for fiscal year 2025-26 in the amount of $35.1 million in operating expenses, $13.6 million in debt service payments, $27.3 million for capital improvements, and $1.6 million for capital equipment expenditures, totaling $77.6 million. OWASA approved a 7% rate increase year-over-year to meet this budget.

For ⅝-inch water meters throughout OWASA’s distribution network, the new monthly service charge will be $25.71 for water service, while ¾-inch combination fire and domestic service meters will be $26.60. Individually metered residential accounts will be billed under an increasing block rate structure designed to encourage efficient water usage.

Starting October 1, 2025, the first 2,000 gallons will be charged at a rate of $0.00461 per gallon, while the next 3,000 gallons will be charged at a rate of $0.01117 per gallon. The rates then climb in blocks: 5,001 to 10,000 gallons; 10,001 to 15,000 gallons; and a final block of 15,001 gallons, which is charged at a rate of $0.03463 per gallon.

“At meetings held throughout March, April, and May, the Board reviewed and discussed the draft FY 2026 budget, including information regarding projected operating expenses, CIP expenditures, and capital equipment purchases,” read a quote from OWASA’s June 26 agenda packet. “These investments in the community’s water and wastewater systems are necessary to provide services, protect the environment and public health, and retain a highly skilled and dedicated workforce. To support these investments, the Board is considering staff’s recommendation to implement a 7% increase in monthly water and wastewater services rates.”

“The proposed rate increase is necessary to advance the most vital and timely investments in infrastructure, operations, and people and to ensure a resilient and sustainable future for our community’s utilities,” the agenda comments continued. “The proposed budget includes projects that will advance ambitious goals for water treatment, including enhanced 10-Year Capital Improvements Program (CIP), and changes to the Schedule of Employee Classification and Authorized Compensation removal of PFAS from drinking water. Additionally, the Clearwell at the Water Treatment Plant, a critical structure in the water treatment process, has reached the end of its useful life, is in danger of failing, and must be replaced. The combined cost of these two projects is currently estimated to be about $176 million. We continue to pursue outside funding to relieve some project costs, including federal and state funding and participation in a multi-jurisdictional lawsuit against PFAS manufacturers.”

“In an attempt to lessen the rate increase for FY 2026, the Board of Directors considered alternative budget scenarios. However, it was determined that the alternatives would put at risk OWASA’s ability to continue to deliver the level of service expected by the community,” noted the Board’s message to the community.

While each year’s rate is set just for that particular fiscal year, projections are calling for local water and sewer rates in OWASA’s network to increase by approximately 30% between fiscal year 2025-26 and fiscal year 2029-30. Current projections suggest another 7% increase will be necessary for the 2026-27 fiscal year, followed by an 8% increase in 2027-28, another 7% increase in 2028-29, and a 5% increase in fiscal year 2029-30. Over that time, the average OWASA monthly bill is projected to climb from $101.11 per month to $131.24, according to projections.

“Future budgets, fiscal years 2026 to 2030, I just want to say, we have the rate increase this year, and then for the next five years we have another 30% cumulative rate increase,” said OWASA Board member Susana Dancy, who also serves as a local residential developer. “(That) is a 30% increase over the following five years, and I just want to draw that to the attention of both the board and to the public and to the staff. That’s a big increase, and that we need to be mindful of the impact that that has on all rate payers.”

“I’m curious to what extent it is we just make these decisions and move forward,” Dancy asked of Executive Director Todd Taylor. “Is this something that’s actually looked at? What goes into these projections of, again, a 30% increase over the next five years?”

“Just to remind everybody, you’re only approving the FY 2026 (rate at this time),” explained Taylor. “Next year we start this entire process over and we’ll look at another five years’ projections. But they’re just forecasts. They’re not approved rate increases. We only approve year-by-year. So last year, if you recall, the rate increases were much higher–actually, it was like 9% for several years. So this, this recalibrates every single year.”

OWASA also noted numerous other investments included in the new fiscal year budget, including water line replacements throughout the county, gravity sewer collection rehabilitation, key infrastructure improvements at the Mason Farm Wastewater Treatment Plant, and additional projects meant to improve OWASA’s service reliability and resiliency. The budget also funds 147 staff positions across OWASA’s organization, along with three apprentices.

OWASA employees who meet basic job expectations are receiving an across-the-board 1% cost of living adjustment (COLA), while employees rated “Exceptional” in employer reviews are receiving an additional 5.80% merit increase. Employees who ‘Exceeds Expectations” will get a 4.35% merit increase in pay with this approved budget, while employees who ‘Meets Expectations” get a 2.90% merit increase. Employees who perform below expectations will not receive the COLA increase, or the merit increase.

This coming fiscal year’s OWASA budget also funds three new positions, including a Backflow and Cross-Connection Coordinator, an Information Technology Support Manager, and a Laboratory Analyst.

According to OWASA staff, a rate increase of 7% will impact the typical household’s OWASA bill by approximately $6.60 per month for every 3,000 gallons of water and wastewater service usage. The proposed rate did not take effect on July 1; it will take effect on October 1, 2025.

Impacts that affected OWASA’s operating expenses and necessitated the rate increase for the Board of Directors included a 3% vacancy allowance to account for position vacancies across the organization, a 9% increase in health insurance costs, and chemical expense rises as the town provides additional powdered activated carbon to reduce PFAS in the community’s drinking water supply.

Adam Powell has been a correspondent for The Local Reporter since 2023. A 2001 graduate of UNC-Chapel Hill, Powell has served as managing editor of multiple local publications, including the News of Orange County, the Mebane Enterprise, the Caswell Messenger, and the ACC Sports Journal. Powell has won more than 20 North Carolina Press Association Awards throughout his journalism career for Excellence in Education Reporting, Excellence in Sports Columns and Features, and Excellence in Video Production. He has also been recognized by the North Carolina School Public Relations Association (NCSPRA) for Excellence in Education Writing and for his newsletters representing Rockingham County Schools and the North Carolina Cyber Academy. The author of four books. Adam currently resides in Mebane with his wife Julie and children Colt and Jenna. This reporter can be reached at:Information@TheLocal Reporter.press