Long-term utility financial planning for Round Rock, Texas

The City of Round Rock, Texas (City) is located approximately 20 miles north of Austin. Historically a suburb, the City has evolved into a major economic hub, supporting a diverse range of commercial enterprises. The City’s utility system provides water and wastewater services to approximately 100,000 residents within the city and an additional 40,000 residents through several wholesale customers. 

As the city experienced rapid growth, it became critical to ensure that its utility rates remained equitable, sustainable, and legally defensible. Specifically, wholesale service rates had not been updated for a significant period, and the City needed a robust financial framework to support its capital improvement program (CIP) and operational efficiency goals.  

Raftelis has served as the City’s trusted financial advisor since 2014, providing a continuous evolution of financial modeling and cost-of-service (COS) expertise. Our partnership includes: 

• 2014 initial study: Conducted a comprehensive COS analysis establishing the cost of service between retail and wholesale customers. Raftelis developed a three-year phase-in for wholesale rates using the utility approach. ‍
• 2018 update: Updated the COS study and developed a three-year rate forecast. This engagement included designing alternative rate structures for residential, commercial, and irrigation classes, all of which were adopted by the City Council. ‍
• Drainage utility planning: Developed the first comprehensive financial planning model for the City’s Drainage Utility to facilitate long-term capital planning and annual fee development. ‍
• Expert witness testimony: Served as the City’s rate expert in Docket No. 48836. When six wholesale customers appealed their rates, Raftelis provided technical defense of the City's methodology. The Public Utility Commission of Texas ruled in favor of the City. ‍
• 2021/2022 study update: Delivered a new financial planning model and updated COS analysis. This study addressed concerns raised during the rate case and recommended maintaining retail water rates at the existing level while decreasing wastewater volume charges by 8.8%. ‍
• 2025 ongoing engagement: Raftelis is currently updating the retail and wholesale rate study to ensure continued alignment with the City’s strategic goals. 
  

Through this long-term collaboration, Raftelis assisted the City in achieving several critical financial and operational milestones: 

• Financial sustainability: The 2022 study confirmed that current revenue levels are sufficient to fund ongoing operations and the CIP. The City maintains a strong financial position with over 200 days of cash on hand and a debt coverage ratio exceeding 2.6x. ‍
• Operational efficiency and cost savings: Raftelis highlighted over $11 million in savings identified by the City, including a $10 million decrease in project cost-share for the regional wastewater system and $1 million in savings from transitioning regional plant operations in-house. ‍
• Capital strategy: The City’s CIP has been largely cash-financed using rate revenue and impact fees, eliminating the need for new debt and significant interest costs. In the most recent study, as growth has slowed down, new debt will be needed to fund the City’s CIP. ‍
• Equity and transparency: By utilizing the "utility approach" for wholesale customers, Raftelis ensured that non-residents pay for their proportionate share of assets and a fair return on the City’s investment, while retail customers are compensated for the risks of system ownership. 
  

Summary of financial performance (FY 2022-2026 forecast) 

The following table illustrates the combined utility financial metrics established during the most recent study.

Raftelis continues to provide the City with the data-driven insights required to balance community quality of life with the fiscal demands of a premier commercial and residential destination. 

For more information, contact us.