For the second consecutive year, the average annual water and sewer bill in Needham will increase by a little more than $100 after the Select Board voted at its June 24 meeting to accept the Water & Sewer Rate Structure Committee’s recommendation for fiscal year 2026.
The new rates represent a 5.5% increase and will show up in the FY2026 first-quarter water and sewer bills in late summer or early fall. The average customer consuming 12,000 cubic feet of water (roughly 90,000 gallons) will now pay about $2,000 per year.
Town Finance Director Dave Davison worked with the rate structure committee, developing 88 alternatives which the committee narrowed down to three options for the Select Board to consider.
In a memo prepared for the Select Board, Davison noted the 5.5% figure was based on the average annual expense increase for the water and sewer department, which he said has been “driven by factors such as energy costs, tariffs on materials, and significant capital projects. These projects include major sewer line replacements, which are projected to cost around $13 million and will impact the town’s debt budget through 2028.”
The year over year increase reflects the effort the committee has been making to spread out the financial impact of the 2020 closing of the Coca Cola bottling plant. The plant had accounted for 20%-25% of the town’s annual water revenues.
One of the alternative rate structures would have produced a nearly 10% annual increase, but the Select Board opted for a more gradual rate of increase over multiple years.
At a June 10 public hearing on the water and sewer rates, Davison explained that the Coca Cola operations had “provided a subsidy effectively for most residents in town. That subsidy is no longer possible.”
Davison explained that, while budgets for the town’s water and sewer departments are predictable, the town’s overall water consumption rates can vary considerably from year to year. Since the bills are based on consumption, this can produce revenue shortfalls when consumption drops.
“The operations cost is a known figure and the rules are, if the fees don’t cover it the property tax must,” Davison explained at the June 10 public hearing. “The property tax is always the funding source of last resort.”
The goal is to set the water and sewer rates so that the revenue produced can fund the annual budgets of the sewer ($10.5 million) and water ($6.3 million) operations. Under state law, municipal water and sewer charges must be tied to the cost of service.
Department of Public Works Director Carys Lustig noted that annual variations in water use are driven mostly by the weather for the year.
“On the years where it’s very dry you’ll see that our water usage is up,” she said. “On the years that it’s very wet you’ll see our sewage usage is up because of some of the externalities of stormwater. So that’s sort of how it ebbs and flows.”
Needham uses a four-step water and sewer rate structure designed to promote conservation while covering the costs of providing services. This tiered rate system means that the more water a customer uses, the higher the rate they pay per unit of water. This is intended to encourage conservation and provide fairness.
Sewer rates are flat, not tiered, and based on water usage since most water ends up in the sewer.
Some residents have secondary meters, also called irrigation meters, which are used solely for outdoor water use. This water does not enter the sewer system and the town does not charge sewer fees on the water measured by the secondary meters.
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