LISTEN: Podcast: We talk about El Paso\u2019s water future with a top executive from city\u2019s water utility<\/a><\/p>\nOther big-ticket items for El Paso Water include the $300 million Pure Water Center that broke ground earlier this year. The plant will treat wastewater from the nearby Bustamante facility to drinkable standards and re-insert as much as 10 million gallons per day back into the city\u2019s water supply.\u00a0<\/p>\n
El Paso Water is entering the last phase of its expansion of the Kay Bailey Hutchison Desalination Plant, in which the utility is increasing production capacity to 33.5 million gallons daily from 27 million currently.\u00a0<\/p>\n
Over the next five years, the utility plans to spend $3.3 billion on capital projects.\u00a0<\/p>\n
If the PSB approves the budget as is, the average bill would include a $45 sewer charge, $39.66 for water, plus the $7.42 stormwater fee to fund flood prevention projects. That doesn\u2019t include other city charges that are tacked onto water bills, including a franchise fee of $6, a charge for a gray curbside trash bin of $21.50 and an environmental fee of $6.50 plus sales tax.\u00a0\u00a0<\/p>\n
When the city of El Paso this fall adopted its budget for the current fiscal year, it increased the trash bin fee by 50 cents and raised the environmental fee by $1.50. The city previously raised the trash bin fee from $19 to $21 just over a year ago.\u00a0<\/p>\n
El Paso Water is not increasing the $7.42 stormwater fee for most residential customers, although the utility is seeking to reduce the fee on small homes and increasing the monthly fee on large homes.\u00a0<\/p>\n
Homes that are 900 square feet or smaller will see the stormwater fee cut to $3 per month. And the utility is requesting to increase the stormwater charge on homes over 4,000 square feet to $18.55 per month, a nearly $4-per-month increase.\u00a0<\/p>\n
John Balliew, El Paso Water\u2019s chief executive, said some of the utility\u2019s flood prevention projects \u2013 such as the huge Will Ruth Pond that\u2019s under construction near Dyer and Will Ruth avenues \u2013 have temporarily stalled for various reasons, such as issues with easements and construction methods at some projects. So, the stormwater unit doesn\u2019t anticipate spending as much as previously expected.<\/p>\n
\u201cWe have a lot of things that are going on,\u201d Balliew said. \u201cThe issue is protecting the people on the bottom end of the (income) spectrum.\u201d\u00a0\u00a0<\/p>\n
El Paso Electric rate increase<\/p>\n
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El Paso Electric last year began replacing its meters with \u201csmart meters\u201d such as this one. The smart meters track energy use in real time and sends the data directly to the utility through a secure communication network. Installations will continue through 2025. (Cindy Ramirez \/ El Paso Matters)<\/p>\n
The Public Utility Commission of Texas is expected to issue a decision on El Paso Electric\u2019s rate increase Dec. 9, and new rates may take effect sometime in early 2026.\u00a0<\/p>\n
The rate increase El Paso Electric proposed in January would increase average electric bills to about $118 monthly compared with average bills of $96 currently, although bills fluctuate significantly throughout the year.\u00a0<\/p>\n
El Paso Electric said it needs to collect an additional $85 million from customers annually to pay off $1.55 billion in capital investments it\u2019s made since its last rate hike in 2021 \u2013 in addition to its requested profit margin. The utility\u2019s capital investments include its $217 million Newman 6 natural gas power plant in Northeast El Paso, $560 million in improvements to its distribution system, and $180 million in enhancements to its transmission system.\u00a0<\/p>\n
Texas Gas Service rate increase<\/p>\n
Texas Gas Service over the summer requested a rate increase from the Railroad Commission, which is the state\u2019s oil and gas industry regulator.\u00a0<\/p>\n
The gas utility said it needs to collect $41 million more annually from its roughly 700,000 customers spread across different parts of Texas. The request would translate into an average bill increase in El Paso of $10 to $15 per month, depending on the customers\u2019 usage.\u00a0<\/p>\n
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A sample residential customer bill from Texas Gas Service<\/p>\n
While bills will increase in El Paso if the rate request is approved, rates would decline for residential customers in the Rio Grande Valley as well as in other parts of Texas. That\u2019s because Texas Gas Service is seeking to consolidate its three noncontiguous service areas across the state, including El Paso, segments of the Panhandle and North Texas, a region near Austin and the Rio Grande Valley.\u00a0<\/p>\n
Texas Gas Service said it needs to bring in more cash to cover higher operational costs resulting from economywide inflation, as well as to cover the utility\u2019s debt-related interest expenses and to provide a return in the form of dividends to stockholders.\u00a0<\/p>\n
The utility\u2019s executives have also said consolidating service areas will help to \u201cspread risks.\u201d If a natural disaster strikes one part of the state and destroys gas infrastructure, the cost of repairs would be spread among all of the utility\u2019s customers statewide, instead of just among ratepayers in a lone service area.\u00a0<\/p>\n
\u201cConsolidation is not new. It\u2019s just difficult to talk about,\u201d said Stacey McTaggart, director of rates and regulatory affairs for Texas Gas Service. \u201cBut we\u2019ve proven, time and time again, that the impacts, if there are some, they are minimal. And it benefits the customer base and the system overall.\u201d<\/p>\n
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Texas Gas Service offices in Northeast El Paso (Daniel Perez \/ El Paso Matters)<\/p>\n
The Railroad Commission is expected to issue a decision on the gas rate hike in late January. RRC staffers, who issue opinions to the commissioners, support the utility\u2019s service area consolidation and recommend approval \u2013 a signal the RRC may be likely to OK merging the service areas.<\/p>\n
Texas Gas Service is a subsidiary of Tulsa, Oklahoma-based ONE Gas, a publicly traded gas utility valued at $5 billion that also serves customers in Kansas and Oklahoma. Over the first nine months of this year, ONE Gas paid out $120 million in dividends to shareholders.<\/p>\n
Profit margin in gas, electric rate increases<\/p>\n
Among the most contentious issues in the rate cases filed by El Paso Electric and Texas Gas Service are the increased profit margins both utilities are requesting.\u00a0<\/p>\n
Monopoly utilities can\u2019t set their own prices, so regulators approve the amount of money a utility can charge customers and also authorize an allowed shareholder profit margin.\u00a0<\/p>\n
Since Texas Gas Service last raised rates in El Paso nearly three years ago, it has been authorized to earn a 9.6% shareholder profit margin in its El Paso service area. The utility is now requesting a 10.4% profit margin for shareholders.<\/p>\n
\u201cOur rates have to include some money for interest to pay the bondholders. And then, stockholders expect dividends, and they expect price appreciation in the stock,\u201d McTaggart said. \u201cOur prices need to include some money to cover that expectation for the stockholders.\u201d<\/p>\n
Since its last rate case in 2021, El Paso Electric has been authorized to earn a 9.35% shareholder profit. But the utility now is requesting a 10.7% return on equity, or shareholder return.\u00a0<\/p>\n
Rate cases are part quasi-legal proceedings and part negotiations. Executives with both El Paso Electric and Texas Gas Service have acknowledged they\u2019re unlikely to win approval of their increased profit margins. Still, it\u2019s possible regulators will approve profit margins higher than they are now.<\/p>\n
\u201cThey\u2019re asking for profits that are higher than the norm,\u201d said Alex Mayer, a professor of civil engineering at the University of Texas at El Paso who has studied utility affordability challenges. \u201cThe shareholders should be absorbing some of these issues.\u201d\u00a0<\/p>\n
El Paso Water, meanwhile, is nonprofit and city-owned. So, the utility charges customers what it costs to provide them water and sewer service without a profit margin included.<\/p>\n
Affordability crisis looming?\u00a0\u00a0<\/p>\n
The general threshold to gauge if utilities are affordable is whether bills for water, electricity and gas exceed 10.5% of the household\u2019s income, said Josiah Heyman, a professor of anthropology at the University of Texas at El Paso who has co-authored papers with Mayer on utility costs in the borderland.\u00a0<\/p>\n
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Josiah Heyman, a professor of anthropology at the University of Texas El Paso, speaks to reporters about the impact of El Paso Electric\u2019s proposed rate increase on low-income residents in the city. (Diego Mendoza-Moyers \/ El Paso Matters) <\/p>\n
The median annual household income in El Paso is just shy of $60,000, according to the U.S. Census Bureau. So, for households at that income level, even if all three rate increases are approved as is, about 6% of the household\u2019s income would go toward paying utility bills.<\/p>\n
However,\u00a0 the higher bills for lower-income households in El Paso could push them further over the affordability threshold and strain budgets.\u00a0<\/p>\n
\u201cAll three (rate increases) hitting at the same time is a problem,\u201d Heyman said.<\/p>\n
One out of every five households in El Paso earns less than $24,000 annually, according to the Census Bureau. So, 20% of the city\u2019s residents will see utility bills eat up anywhere from 15% to 30% of their income \u2013 which means relatively little income leftover to pay for housing and other necessities.\u00a0<\/p>\n
\u201cWhen you average things out, you really erase some of the people that are struggling the most,\u201d said Veronica Carbajal, an attorney who heads the Sembrando Esperanza Coalition that represents neighborhoods mostly in South-Central El Paso.\u00a0<\/p>\n
\u201cPeople will find a way to pay for the water and the electricity, but at what cost?\u201d she said. \u201cIf it means that they\u2019re using the bare minimum, or they\u2019re exposing themselves to extreme weather, that they\u2019re taking on risky behavior like using a propane gas tank inside without proper installation, that\u2019s what we need to really be looking into.\u201d<\/p>\n
\u201cThe averages make that suffering invisible,\u201d Carbajal said.\u00a0\u00a0<\/p>\n
Balliew said about 3,000 of El Paso Water\u2019s residential ratepayers are past-due on their water bills, or roughly 1.5% of the utility\u2019s 203,000 household customers.\u00a0<\/p>\n
\u201cThat bill comes in, and then what the heck do you do?\u201d Mayer said. \u201cCan you rely on your family members within the household? Do you have to reach out further and further into the family and friends?\u201d\u00a0<\/p>\n
As part of its rate case, Texas Gas Service requested approval of an affordability program in which customers eligible for federal benefits such as SNAP can apply for a 25% discount on their gas bills. However, the program would be open only to 30,000 customers \u2013 out of the utility\u2019s 700,000 customers statewide. Railroad Commission staffers have recommended RRC commissioners not approve that program.\u00a0<\/p>\n
El Paso Water is seeking to tweak its rates so that households that use little water get a break on their water bill. Customers that use 4 CCFs (one CCF equals about 748 gallons) or less would experience a $1.39 per month rate increase, while customers that use just one CCF per month would see a small bill decrease next year.\u00a0<\/p>\n
That\u2019s El Paso Water\u2019s way of trying to limit bill increases on lower-income households in El Paso. In the last state legislative session, the utility sought to get a bill passed<\/a> that would have allowed El Paso Water to bill customers differently based on income \u2013 a method of billing that\u2019s currently illegal.\u00a0<\/p>\nEl Paso Water over the next five years plans to invest $3.3 billion into the city\u2019s water, sewer and flood control systems, so\u00a0 annual rate increases will likely continue in the coming years.\u00a0<\/p>\n
And with longer-term plans for other costly projects such as piping in water from Dell City, Balliew said the utility must be able to bill based on household income to some extent. That\u2019s how the utility could avoid charging water bills that are unaffordable in El Paso on a big scale, especially for seniors and residents living on a fixed income.\u00a0<\/p>\n
\u201cThat\u2019s the reason why we have tried for that sort of income-based affordability bill,\u201d Balliew said. \u201cAnd at some point in time, we have to have that. We can\u2019t do without it.\u201d<\/p>\n
Related<\/p>\n
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![\"\"](\"https:\/\/www.newsbeep.com\/us-tx\/wp-content\/uploads\/2025\/11\/PSB-pic-1120-scaled-e1763756372267-1024x667.jpg\")
El Paso Water CEO John Balliew, right, speaks about the utility\u2019s proposed rate increase with members of the Public Service Board, which governs El Paso Water. (Diego Mendoza-Moyers \/ El Paso Matters) <\/p>\n