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HomeDEPARTMENTSUtility Billing...IMAGE...Frequently Asked Questions about Water Rates > How are the City's Water and Wastewater Rates Determined?

How are the City's Water and Wastewater Rates Determined?

The City of Melissa’s Enterprise Fund is commonly referred to as the Water Fund. The water fund operated as a business, independent of property tax, sales tax, and only funded with user fees. The revenues derived from the Water Fund are designed to cover the cost of debt for infrastructure and improvements, providing water, wastewater, solid waste and utility billing services to the residents and businesses located in Melissa.

WF Budget 2017_cropped_smallThe City of Melissa utility rates are made up of water, wastewater and solid waste fees. The North Texas Municipal Water District (NTMWD) delivers water to the City and treats its wastewater as well. Solid waste services are provided by a third party vendor, currently Waste Connections, and rates are based on number of trash carts.

Water and Wastewater rates are made up of a minimum fee based on meter size (due to maximum demand to the system) and volumetric usage. The volumetric water rate is billed using a progressive tiered structure as a matter of equity and to incentivize conservation. For residential customers, wastewater rates are based on annual winter consumption, made up of the average water consumption from December, January and February. This average consumption is calculated each March and is used for sewer billing the next year (New residents as of FY17 are assessed 4,500 gallons for their wastewater volume until the next time wintertime averaging is done). Using the winter average prevents higher water usage due to irrigation in the summer months from inflating residential sewer bills. Nonresidential customers are billed for actual water usage for sewer monthly. 

Value of WaterThe Melissa City Council has committed to conducting a water rate study annually to ensure user rates will cover annual maintenance and operation costs of the water and wastewater systems. The rates for the water and wastewater services are established to cover annual debt obligations, purchase of water and treatment of wastewater, maintaining the system including personnel, capital improvements and repairs, and to maintain a stable reserve fund balance. When budgeted revenue exceeds costs, those dollars are put in the reserve fund balance to get to our goal of 90 days. Our Financial Policy is to maintain at least 90 days in savings.

Variables in the rate-making process that the City must take into consideration include:

  • Wholesale water purchase rates from NTMWD
  • Wastewater treatment costs from NTMWD
  • Reserve Fund Balance (depending on fund level and goals)
  • Water sales 
  • Maintenance needs of water and/or wastewater systems 
  • Drought and impact of conservation 
  • Growth
  • Weather anomalies
  • Need for infrastructure debt

After taking all of these into consideration, staff along with a professional rate consultant makes a recommendation to Council regarding the rates and whether a rate increase is warranted to meet the projected needs of the coming year.

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