(Omaha, NE) -- The Metropolitan Utilities District (M.U.D.) Board of Directors approved the 2025 budget plan. There are increases to natural gas and water rates. Still, M.U.D. expects an almost 2% decrease for residential bills. They say the rate increases will be offset by a decrease in the cost of natural gas. The gas and water rate increases take effect January 2, 2025.
The average residential gas and water customer will see a 1.9% net decrease on their combined bill, although individual customer bills will vary based on weather, consumption and the pass-through cost of natural gas. The average residential gas customer will see a 6.1% annual decrease to their bill as compared with 2024 budget assumptions. A modest increase to natural gas rates will be offset by a projected decrease in the cost of natural gas, which is passed through to M.U.D. customers.
Included in the overall projection, is a 2.5% increase to gas rate commodity charges and a change to the Gas Infrastructure Replacement charge from $3.75 to $4.00 per month for residential customers. The annual gas bill is projected to decrease by approximately $43 per year based on budgeted projected usage of 772 therms.
In addition, residential water customers will see a 5% annual increase to the average water bill as compared with 2024 budget assumptions. Included in this projection, is a 7.6% increase to the commodity component of rates and a change to the Water Infrastructure Replacement charge from $4.75 to $5.00 per month for residential customers. The annual water bill is projected to increase by approximately $22 per year based on budgeted projected usage of 104.7 CCF (78,300 gallons).
In addition to providing gas and water services, the District acts as a billing agent for local municipalities, so many customers also see their municipal sewer and/or trash services on their monthly M.U.D. billing statement. The rates for these additional services are set by the respective municipalities and not the M.U.D. Board of Directors.
“This budget plan will fund current operations while laying the groundwork for serving our future generations of customers,” said M.U.D. President Mark Doyle. “It also allows us to continue updating critical gas and water infrastructure under our rigorous asset management plan.”
Targeting critical gas and water infrastructure
Since 2008, the District has replaced more than 475 miles of gas mains and replaced or assessed over 160 miles of water mains. The District is targeting the abandonment of all the remaining cast iron gas mains by the end of this decade. The majority of the cast iron work will be funded through the Pipeline Hazardous Materials Safety Administration’s Natural Gas Distribution Infrastructure Safety and Modernization grant program.
One of the water infrastructure challenges is the increasing frequency and cost of the more than 500 water main breaks each year.
“We are laser-focused on reversing the trend of water main breaks that impact our community,” Doyle said.
To that end, the District uses a variety of proactive strategies, including replacement of water mains using materials that are more resilient to corrosion. The utility has also implemented technologies to detect water leaks, assess pipe condition and analyze data to target critical water mains for rehabilitation or replacement. In 2025, the District is targeting the replacement or assessment of more than 17 miles of water main.
Lead service line replacement program
Another initiative, which is occurring in communities across the U.S., is the removal of customer-owned lead water service lines to address the potential health hazard. There are fewer than 16,000 lead service lines identified in the metro Omaha area. In 2024, the District started a program to replace these lines over the next 10 years. The “Detect. Correct. Protect. Lead Service Line Replacement Program” assists customers at no direct cost to them.
The estimated total cost to replace all the lines is $157 million. For the initial phase, the District is leveraging state and federal grants and loans rather than rates to fund the program. M.U.D. will continue to seek funding on behalf of its customers for subsequent phases of the program.
Upgrading facilities to strengthen resiliency and business continuity
Capital improvements to renovate the District’s existing construction center are progressing and construction is also underway on a second construction center near Blair High Road and State Street. These initiatives support ongoing growth, business continuity and infrastructure replacement programs.
A multi-year capital improvement project to upgrade the District’s liquefied natural gas plant, an on-site storage facility, is nearing completion. The project increased the plant’s capabilities, improving reliability for the next 40 years.
M.U.D. continues to invest in critical system improvements, including ongoing projects for its three water production facilities.
Capital improvement plans are largely financed with bond issuances, as the associated benefits will be realized over many years and many generations of customer-owners.
Cost of natural gas
The cost of natural gas, which is passed through to M.U.D. customers, is projected to be lower in 2025 as compared with 2024 budget assumptions largely due to declining natural gas prices. These prices are driven by natural gas storage and production levels as compared to last year.
In addition, M.U.D. employs several strategies to lower natural gas costs for customers, including long-term supply contracts and on-site storage. Approximately 73% of M.U.D.’s natural gas is purchased via prepaid agreements, which is expected to save customers $14 million in 2025. A long-term transportation and pipeline storage agreement with Northern Natural Gas is expected to save an additional $17 million next year.
On-site storage, along with pipeline storage, also contribute to the lower cost of natural gas by minimizing spot market purchases in times of high demand when gas costs are typically at their highest.
Utility assistance, resources and affordability
Customers faced with financial hardships are encouraged to reach out to Customer Service at 402.554.6666 to discuss their account. Other tips to help manage bills include enrolling in budget billing, applying for assistance and taking action to reduce consumption. Visit mudomaha.com for more information.
Image from OPPD