Across-the-board utility rate hikes proposed in Olympia for 2027

A package of proposed utility rate hikes would lead to a roughly 5.5 percent overall rise to the average bi-monthly utility bill in the City of Olympia next year.

Olympia Water Resources Director Gary Franks presented a proposed package of 2027 utility rate increases, estimating it would add about $19.51 to the average bi-monthly utility bill.

The proposed rate increases are 4.5 percent for drinking water, 6.5 percent for waste resources, 8.7 percent for storm and surface water, and 9.5 percent for wastewater.

Franks said the increases reflect  higher costs for salaries and benefits, fleet operations and indirect expenses. He addressed the rate increases at an Olympia City Council at a meeting on Tuesday, Oct. 6.

Franks also pointed to increasing energy costs, particularly for drinking water and wastewater, which rely on power and pumping.  

He said revenue growth has remained limited, as customer growth has stayed flat.  

Another ongoing pressure is rising energy costs. Franks said Puget Sound Energy has proposed a 13.7 percent rate increase for 2027, with additional increases proposed for 2028 and 2029, amounting to a cumulative 25.4 percent increase over three years. He said the increases would particularly affect drinking water and wastewater.  

Waste resources 

The waste utility is projected to have about $20.2 million in expenditures, while revenues are expected to grow by about 1 percent. That would lead to a projected budget gap of just over $2 million.  

To manage the gap, Olympia Waste Resources Director Ron Jones recommended several cost-saving measures, including freezing a full-time employment position for most of 2027, extending the life of some smaller vehicles and eliminating transfer to capital.  

The department woul also tap $500,000 in fund balance reserves. Jones said the measures would help bring the utility budget into balance, while limiting the impact on rates.  

Drinking water  

The Drinking Water Utility is recommending a 4.5 percent rate hike to address projected expenditure increases that are not keeping pace with costs.  

Olympia Drinking Water Utility Director Mike Vessey said expenditures are projected to rise by 3 percent, reaching $18.1 million, while revenue growth remains stagnant. He said the revenues would fall short of expenses by about $818,950.  

To help close the gap, the utility proposed reducing its planned transport to capital facilities projects to $500,000 from $1.6 million.  

Wastewater, stormwater 

The Storm and Surface Water Utility is proposing an 8.7 percent rate increase to address a projected budget gap of approximately $1.6 million. 

Franks said expenditures are projected to increase by 15.7 percent, or roughly $1.4 million, bringing total expenditures to $10.6 million for next year. Revenues are projected at approximately $9 million, resulting in a budget gap of $1.6 million.  

To help close the gap, the utility plans to use approximately $486,000 in fund balance and reduce its capital transfer by $256,000.  

Franks said the budget also reflects the loss of grant funding for the street sweeper, which is expected to end in June 2027. The wastewater budget also includes additional cost pressures, including a 3 percent annual rate from LOTT.

General facility  

The proposed General Facility Charges and LOTT Capacity Development Charges include rate increases for drinking water,  wastewater, storm and surface water, and LOTT, resulting in an overall average increase of about 4.5 percent.  

Franks said the city is taking a phased approach to align rates with previous utility master plan recommendations, while a new multi-year rate study would guide future adjustments.  

For affordability, the proposed drinking water and wastewater rates remain below the 2 percent of median household income threshold used by the federal and state agencies.  

Affordability 

Council member Robert Vanderpool discussed the possibility of creating additional utility rate tiers based on household income in the future.

The approach could allow higher-income customers to pay more, while providing lower rates for households with lower incomes.  

“I’m deeply concerned about folks who can barely afford rent, or fixed-income seniors who are losing federal programs,” Vanderpool said. “The last thing I want is for them to get to the point where they are not able to keep the power on in their homes during the winter or run the water when they need to.” 

Franks said staff would ask the city's consultant whether other communities use income-based utility rate structures.  

He also mentioned two assistance programs. The Lifeline Program provides a 50 percent bill reduction for qualifying low-income seniors and disabled residents, while and the Helping Neighbors Program provides assistance to customers with past due bills.  

A public hearing on the proposed utility package is scheduled for Oct. 27.