Portland’s water and sewer rates are likely to increase this summer.

The Portland Water Bureau is proposing a nearly 8 percent hike in water rates, while the Bureau of Environmental Services is asking for a 5.15 percent increase in sewer rates. The spike in combined rates amounts to a 6.24 percent increase in water and sewer bills. Developers could also see a 5 percent jump in system development charges (SDC) for construction projects.

The proposed rate hikes come after the Water Bureau raised water rates by nearly 8 percent in 2023. BES raised sewer and stormwater rates by about 4 percent last year.

Leaders from both bureaus told the Portland City Council last week that rising operational and maintenance costs, along with the construction of the Bull Run Water Treatment plant, necessitates a rise in fees for water and sewer services. 

Unlike other city bureaus, BES and the Water Bureau don’t get money from the city’s main budget. Instead, they rely on rate paying customers.

“Our operating and capital budgets for both BES and Water are [almost] entirely rate and fee-based,” Dawn Uchiyama, director of the Bureau of Environmental Services, said Wednesday. “We do not draw money from the general fund. In fact, 90 percent of our revenue comes from water, sanitary sewer, and stormwater rates.”

Despite limited revenue streams, BES and the Portland Water Bureau have an estimated $47.5 billion worth of combined assets, which accounts for nearly 70 percent of the city’s total inventory of capital (infrastructure).

As Portland tries to encourage builders to construct more affordable housing, the city has tried to keep its developer fees low.

Uchiyama said the proposed 5 percent increase in SDCs for water and sewer are in line with a proposed 5 percent increase from the Bureau of Development Services, but noted that in many cases, the SDCs collected are “less than the full cost of services provided.”

That means the city has to recoup the lost money somewhere.

“It does mean that we are falling further behind on where the SDC would be for full reimbursement, and so, any SDCs that are not charged at the calculated rates… which means that ratepayers are paying those development costs,” Portland Water Bureau director Gabe Solmer told council. 

While both bureaus rely heavily on revenue from water and sewer bills, and construction charges, their latest budgets assume a massive cash infusion from the Portland Clean Energy Fund—$17.8 million for the Water Bureau ($9.3 million of which will be one-time funds) and $77.5 million for BES in the form of $15.5 million annually, for things like tree planting, watershed and stormwater management, and restoration of natural areas. 

The proposal to use PCEF dollars for ongoing water and sewer operations has proved unpopular among many conservationists who note PCEF— which collects a 1 percent sales tax on large retailers in the city—was created to steward environmental initiatives and help the city meet its carbon reduction goals, not bail out other city operations. 

The council heard the fee hike proposals Wednesday, March 6, and is expected to vote on the cost increases March 13. If the council approves the new rates, they’ll go into effect July 1.

The city estimates the new combined utility rates will amount to an $8.88 increase per month for a typical single-family residential customer, which means they’ll pay about $151 a month for water, sewer, and stormwater.

Sewer and stormwater rates account for about 60 percent of a customer’s bill. Water usage makes up the other 40 percent of costs.

The Water Bureau acknowledged the potential hardship to Portlanders, reiterating its financial assistance program for low-income households.

“We recognize that our customers are facing higher costs of living and that any utility rate increase can be a hardship,” Brandon Zero, a public information officer for the Portland Water Bureau, said Friday. “Like other utilities, we must endure economic realities like rising costs of construction and the supplies we need to keep our system operational and ensure our water is safe and reliable.”

Zero said the bureau’s priority is to “protect public health by meeting or exceeding state and federal drinking water regulations.”

Oversight board sounds the alarm

While bureau leaders say the rate increases are necessary, public watchdogs say the transparency around Portland’s utility rate hikes are opaque.

Bob Sallinger serves on the Portland Utility Board (PUB). The community oversight board was created in 2015 as a layer of accountability and oversight for public ratepayers of Portland’s water and sewer utilities. The PUB evaluates utility bureau budgets, capital spending, policies, and programs, and often makes recommendations about proposed rate increases.

That didn’t happen this year. Sallinger said since the creation of the PUB nearly 10 years ago, it’s been difficult to get the information needed for any meaningful discourse.

“Today, the oversight is much, much more superficial than it was prior to the creation of the PUB,” Sallinger said, comparing his decades of experience on budget committees and other public groups to the work of the oversight board.

“I’m not here today to criticize anyone,” Sallinger told the council, explaining the PUB’s decision not to make a recommendation on the rates. “But the result is that we are simply not getting the kind of information we need to provide the oversight that we are charged with providing.”

Sallinger said the PUB was given almost no lead time to review the water and sewer utility budgets, and the information provided to community board members was sparse, at best. He said the PUB certainly wouldn’t recommend lowering the rates, noting the board’s skepticism about the long-term sustainability of the Water Bureau and BES finances.