In keeping with its annually updated 10-year rate plan, the Altoona Water Authority is increasing total charges for its average customer by 2.78% for next year, adding $3.65 a month to a bill that will rise to $135.

The entire increase for such a user of 4,000 gallons per month is lodged in the fixed-cost portion of sewer charges, with that fixed-cost portion rising 8.5%, as approved by the board Thursday.

Having been launched in 2022, the rate plan now extends to 2033, at which point the total water and sewer bill for the average user is projected to be $170 a month.

At $63 per month for the average user for 2026, the water portion of the charges will be $11 higher than the average of $52 among a sampling of systems across Pennsylvania, according to rate study author Ben Kapenstein of PFM in Harrisburg, who conducted a remote presentation to the authority board.

The Altoona water rate will be $31 lower, however, than the maximum charge of $94 a month among the sampled systems, according to PFM.

On the water side, 63% of revenues go for operations, 18% for capital projects and 19% for lease payments to the city, according to PFM.

On the sewer side, 49% of revenues go for operations, 25% for capital projects and 13% for lease payments to the city (with debt service money and lease payment debt service money shifted to the capital costs category).

The authority has large capital expenses, given that it has an extensive, aging system, with seven water treatment plants designed to ensure there is sufficient water from the small headwaters streams that supply the authority reservoirs.

The current capital plan calls for spending $126 million on capital improvements through 2033, according to PFM.

The annual lease payments to the city are based on an arrangement struck several years ago when the city took ownership of all the authority’s physical assets, then leased them back for the authority to operate — as a means of adding revenue for city operations.

The 2026 lease payment to the city will be $7.3 million, according to authority controller Gina DeRubeis.

All the increases outlined in the rate plan are assigned to the fixed-cost portion of customer charges, as the authority aims to ultimately base 70% of those charges on the largely unchanging costs of delivering water and carrying away wastewater — with the other 30% of charges based on volume of water used.

Orienting charges toward fixed costs that don’t vary from customer to customer rather than cost of the water each customer uses — volumetric charges — helps stabilize revenue from year-to-year, because it reduces the incentive for customers to reduce water usage when charges rise, which partially nullifies the effect of raising rates, thus setting up a problematic cycle of price increase and use reduction.

The authority isn’t raising its water specific charges for 2026 because near-term capital expenses were lower than previously predicted, due to the deferral of some capital projects, according to PFM.

Starting in 2027, with the application of rate “smoothing,” water rates for the average customer are projected to rise 5% per year through 2032, then drop to 3% for the final year of the plan, according to PFM.

While it is raising sewer rates for 2026, the authority probably won’t need to raise those rates in 2027, according to PFM.

Starting in 2028, however, with smoothing, sewer charges for the average customer are projected to rise 3% annually through 2033, according to PFM.

Upcoming capital projects on the water side could include a $16 million upgrade in 2030 for the Plane 9 Water Treatment Plant and a $36 million renovation of Mill Run Dam in 2032, comparable to the recently completed renovation of the Bellwood dam, according to Mark Glenn of Gwin Dobson & Foreman, the authority’s consulting engineer.

The biggest potential capital expense cited in the capital plan on the sewer side is $16 million for 2033 to make a start in separating the components of the city’s combined sanitary-storm sewer system that serves parts of the older section of the city.

That amount is really just a “placeholder” for now, according to Glenn.

What may need done with the combined system will largely depend on environmental agencies’ reactions to the findings of a required five-year stream study that Gwin is conducting on the effectiveness of the authority’s combined sewer overflow system, Glenn said.

That system discharges storm water containing highly diluted sanitary sewage during weather events that increase flows beyond the capacity of a pair of 1-million-gallon overflow tanks and the sewer lines that take the combined sewer flow to the Westerly and Easterly treatment plants, respectively — along with the capacities of the plants themselves, according to Glenn.

Mirror Staff Writer William Kibler is at 814-949-7038.