TMWA Board of Directors Defer
Rate Increase

TMWA's Board of Directors has voted to defer a 2.5 percent rate increase that was scheduled to be implemented in May 2019. The deferral includes all customer classes. The vote took place at the Board of Directors meeting on Dec. 13, 2018.

"Given TMWA's positive financial position, the Board can deliver some good news to our customers," said Vaughn Hartung, TMWA's chairman of the board. "Rate increases are necessary at times, but we are happy to announce that TMWA's forecasted financial conditions can accommodate this rate deferral."

TMWA's financial factors that contributed to this deferral include unseasonably warm summers in the past three years, which resulted in increased water sales. Also, near-term flows in the Truckee River are projected to be enough to allow operation of our hydroelectric plants at near capacity levels. Last year, the three plants on the Truckee River generated an all-time high of $3.7 million in hydroelectric power revenue which offset almost all of TMWA's power costs. Additionally, increases in interest returns on TMWA's bonds and higher than anticipated cash balances resulted in higher investment earnings.

Given the positive changes in TMWA's financial situation, TMWA staff and the Standing Advisory Committee (SAC) recommended that the Board defer the 2.5 percent rate increase scheduled for May 2019 and move it to May 2020. They also recommended that the Board reconsider the scheduled May 2021 and May 2022 increases at a later date. TMWA's funding plan will be updated again in the fall of 2019, and the Board and SAC will reexamine TMWA's financial position to decide if a rate increase is necessary in 2020.

Update on TMWA's Plan for Groundwater Sustainability on the Mt. Rose Fan

Just under two years ago, TMWA held a community open house regarding the implementation of a major groundwater sustainability plan for the Mt. Rose fan area. A cornerstone of this plan is the construction of the Mt. Rose Water Treatment Plant off Whites Creek near Callahan Road, which is slated to be operational by spring of 2020 (see architectural drawings below).

In securing more reliable water service to the Mt. Rose fan, the following related infrastructure projects have already been completed:

• Three area wells have been retrofitted as part of TMWA's aquifer storage and recovery program.
  
  
• A ten-inch water main and three booster stations have been added to extend TMWA's Truckee River water supply into the uppermost reaches of the Arrowcreek subdivision, Callahan Ranch and Montreux.
  
  
• Finally, a 16-inch water main along Arrowcreek Parkway has been completed. This project, along with a new pump station scheduled for construction in fall of 2019, will tie former customers of the South Truckee Meadows General Improvement District area into TMWA's distribution systemcovering both the Saddlehorn and Thomas Creek Road areas.

Collectively, these projects and the Mt. Rose Water Treatment Plant are designed to maximize surface water supplies from the Truckee River and Whites Creek when available. Bringing more surface water to south Reno also allows TMWA to rest and recharge wells, keeping groundwater available for times when surface-water supplies are low.

Coordinated management of surface and groundwater supplies is part of TMWA's overarching conjunctive-use strategy, and it works. Bolstered by healthy precipitation in 2016-2017, the strategy has markedly reduced groundwater pumping in the region. Over the past four years, water levels have risen 5-10 feet in area aquifers. The completion of the Mt. Rose Water Treatment Plant will allow us to enhance this approach to provide long-term benefits to our customers, as well as neighboring domestic well owners.

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Truckee Meadows Water Authority (TMWA) has literally saved tens of millions of dollars since its inception by remaining vigilant and nimble in the management of its long-term debt. The bulk of TMWA's debt came in 2001, when the City of Reno, City of Sparks and Washoe County (RSW) partnered to purchase the water utility from Sierra Pacific Power Company (Sierra) for $354M.

In September of 2000, Sierra announced it would sell its water business, ending over a century in which the company or its direct predecessors operated both power and water in our community. Local leaders faced the possibility of our region's primary water provider being sold to an out-of-state company. This wouldn't necessarily be a bad thing, but they judged water to be too essential for our community to leave it to chance.

In October of 2000, RSW submitted a joint proposal to purchase the water utility from Sierra. Shortly after, Truckee Meadows Water Authority (TMWA) was born.

To purchase the utility, over $452M in revenue-backed bonds were sold—$354M to purchase the water and hydroelectric assets from Sierra with the remainder used for improvements on the water system, capital reserves, staffing and operational costs (insurance, office space, computers, desks ). TMWA was literally starting from scratch and a lot needed to be done in a very short time.

"The 2001 Bonds were basically the mortgage on the house," said Michelle Sullivan, TMWA Chief Financial Officer. "TMWA has taken on additional debt since its inception—rising to a peak of a little over $556M in 2008—but that first bond issuance has always represented the bulk of what weve had to manage. When youre dealing with hundreds of millions of dollars in debt, Interest rates can make a profound cost difference over the life of a loanor, in TMWAs case, the period before a bond series matures and must be repaid.

"TMWA's finance team has always been very proactive in finding opportunities to refund older bond series by issuing newer ones at a lower interest rate," Sullivan said. "By doing this, weve lowered our cost-of-debt obligation by well over $50M since TMWA was founded."

Since 2015, TMWA's long-term debt has been reduced by over $76M. This has been largely due to the premiums TMWA has earned on its lower-interest bond reissuances.

"Though were a public agency, from day one, TMWA has prided itself on operating like a business," Sullivan said. "The way we manage our bond debt is a prime example of this. Our Debt Management Policy requires that we realize at least three percent savings before we can do a refunding. Weve almost always done better than that. The bottom line for our customers is that lower interest rates mean lower cost of operations which, in turn, can help keep water rates as low as possible."