Rio Rancho water customers will see modest but steady rate increases over the next five years — and in exchange, the city is promising safer drinking water, fewer main breaks, better fire protection and a long-term drought buffer.
The Governing Body made that trade official on March 12 by approving a $63.4 million water and wastewater bond ordinance.
Why rates are going up — and why they had to
The 3% annual rate increases for both water and wastewater — locked in through 2030 and already in effect since July 2025 — didn’t emerge from a vacuum. City utility staff presented the Governing Body with a detailed rate study in February 2025 showing that operational costs have surged well beyond what previous modest rate adjustments could cover.
“The 3% increase is not solely for the debt,” City Manager Matt Geisel told The 528. “There are increased operating costs, for instance. Energy — PNM — is among the top expenses for the utility, as well as other materials such as chemicals.”
According to city presentation at a work session in 2025, over the past six years, the utility’s costs have climbed sharply across every major category:
- Electricity for pumping is up more than 43.5%, from roughly $2.7 million to $3.8 million annually
- Chemical costs to treat water have nearly doubled, from about $592,000 to $996,000
- Operations contractor costs are up more than 15% — and a recent contract amendment pushes that annual expense up another 11%, from roughly $8.9 million to $9.9 million
- Capital project costs have escalated dramatically — a wastewater treatment headworks project originally estimated at $12.5 million came in at $28.7 million
What you’ll pay
For the average Rio Rancho residential customer, the combined monthly water and wastewater bill currently runs $103.88. The 3% annual adjustment adds $2.92 to that bill in the first year. By 2030, the cumulative increase reaches $15.54 per month.
For a customer on a standard 5/8-inch meter, the base monthly water service charge climbs from $13.17 in 2026 to $14.83 by 2030. The base wastewater charge rises from $15.26 to $17.18 over the same period, with per-gallon volume charges increasing proportionally.
A dedicated Water Rights Acquisition Fee — a monthly charge on every utility customer — also increases 3% annually. The fee currently runs a minimum of $6.00 per month and adds roughly $0.30 to the average bill in FY26, reaching an additional $1.66 per month by 2030.
The Water Rights Acquisition Fee addresses a long-term obligation that doesn’t go away: state permits require Rio Rancho to purchase a minimum of 728 acre feet of eligible water rights every five years through 2063. The cost of those rights has quadrupled over 20 years and now exceeds $19,000 per acre foot — with higher prices expected. The city projects it still needs to acquire roughly 3,400 acre feet to meet permit requirements, at an estimated total cost of $130 million.
Because all bonds are backed solely by utility revenues — not property taxes — residents won’t see any impact on their tax bills. Repayment comes entirely from monthly water and wastewater charges.
What the money funds
The bond vote is the first move in what the city calls “bond cycling” — a strategy to issue two separate $25 million utility revenue bond packages over five years, modeled on how Rio Rancho already manages its general obligation bonds, providing a steady, predictable construction funding stream.
The $25 million in new borrowing targets three areas identified in the city’s 2026–2030 Capital Improvement Plan, which maps roughly $233 million in total utility needs:
- Water system ($82M total): Re-drilling Well 4 ($14.5M) to serve Corrales Heights and NM 528 growth corridors; $33.9M in water line replacements tied to roadway projects; $15.5M in water rights acquisition to meet state permit requirements
- Wastewater ($64.3M total): A $25.6M membrane bioreactor expansion at Wastewater Treatment Plant 2 to replace aging equipment and accommodate growth; relocation of Lift Station 2 ($4M) for Southern Boulevard construction; $20M in sewer line replacements along roadway and NM 528 corridors
- Recycled water ($5M): A new aquifer injection well and advanced water treatment facility to recharge the underground aquifer the city draws from — a long-term drought resilience measure
The $50 million in total bond proceeds across two issuances will fund roughly 33% of the full five-year capital plan. The remainder comes from utility revenues, grants and other sources.
Projects residents will feel directly include arsenic removal upgrades to keep drinking water within federal safety standards, replacement of aging and corroding lines to reduce breaks and spills, and expanded water storage that supports fire suppression. That storage contributes to the city’s current Class 2 fire protection rating from the Insurance Services Office — one of the highest possible, a designation that can lower homeowners’ insurance premiums. A recent system review also confirmed Rio Rancho’s distribution lines contain no lead.
The refinancing piece
The ordinance also bundles up to $38.42 million in refunding bonds to refinance older debt — including targeted maturities from the city’s 2015 utility revenue bonds and three state finance authority loans from 2016. Those refunding bonds will only be issued if market conditions produce savings of at least 3% above issuance costs. Based on January market data, the city estimates the net savings at $1.95 million for ratepayers.
Mayor Greg Hull highlighted the refinancing at the meeting as evidence of improved utility management. “We’re refinancing some debt here to save the ratepayers $1.95 million in interest payments, which is huge,” he said. “That’s very responsible, and that’s very transparent.”
The $25 million in new bonds carries an estimated all-in interest rate of around 3.6%, with a final maturity no later than May 15, 2057.