Omaha mayor: Anticipated MUD rate hike not related to streetcar construction plans

According to a release from the mayor’s office, the utility had already been planning to raise rates on water, natural gas
(Daniel Gomez)
Published: Dec. 6, 2022 at 7:27 PM CST
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OMAHA, Neb. (WOWT) - Omaha-area natural gas and water rates are going up, but the mayor’s office says it’s not because of the streetcar.

According to a news release from Mayor Jean Stothert’s office, officials from the Metropolitan Utility District told Omaha City Council members on Tuesday that the rate hikes were needed “to pay for moving its water and gas lines along the streetcar route during construction.”

But a rate hike was already in the works, according to the mayor’s office.

According to Omaha Public Works, “many of MUD’s lines in the urban core are 100-plus years old and will need to be replaced with or without the streetcar. In the last five years, approximately 73 main breaks have occurred in the urban core,” the release states.

While it has not yet released its 2023 budget plan, the utility’s 2022 budget plan showed that MUD had anticipated raising water rates by 4% and not adjusting natural gas rates at all. The budget notice did note, however, that customers would likely be paying more for natural gas overall — as much as 32% — as the cost to purchase natural gas was expected to climb, in addition to other “pass through components.”

MUD estimated that the average residential customer would pay an additional $191 in 2022.

Still, the mayor’s office called for MUD to provide documentation that would validate its estimate of $20 million it said Tuesday would be needed to make the necessary adjustments along the streetcar route.

“Three years ago, MUD estimated a much lower cost,” the news release states.

The city says MUD would only need to pay $4.9 million, which it says the utility has in reserves. In turn, the city would pay $5 million to pay for replacement costs of newer lines needed along the streetcar route and issue bonds for the rest of the funds needed.

“MUD would repay the city over a period of time that would be mutually agreed upon” but no sooner than 2025, the mayor’s release states.

Following that plan, which delays repayment, would “allow MUD to accelerate its replacement program in the urban core, and save money,” the release states.

MUD’s budget review does note that some of its cash reserves are used to fund the district’s operating expenditures, gas purchases, and debt service costs.

“Funding for capital improvements and critical infrastructure replacement will be supplemented by the planned issuance of revenue bonds,” the summary states.

The mayor’s release called on city and utility officials to come up with an agreement that would prevent MUD’s streetcar-route expenses from being passed along to its customers.