Texas city proposes utility hikes, online payment fee, and an $8.30 jump in average bills

Monthly costs for several city-provided services in Denton, Texas, may increase, affecting household bills for water, wastewater, drainage, and electricity.

If council members sign off on the proposed 2026-27 budget in September, city estimates indicate the typical residential utility bill would go up by $8.30 a month starting in October.

What's happening?

The budget proposal includes rate increases of 3% for water, 9% for wastewater, 5% for drainage and 3% for electric service. Rates for solid waste would stay the same, but the city is proposing a credit card processing fee for online payments beginning Oct. 1.

For an average residential customer, the city projects the monthly utility bill would climb from $267.82 to $276.12, which amounts to a 3.1% increase. Council member George Ferrie said the proposed hikes are "exactly the opposite of what we're hearing in terms of concerns" from the community.

Denton Municipal Electric now expects to bring in about $310.5 million in 2025-26, well below its earlier revenue projection of $526.6 million. That shortfall has become a major part of the rate discussion. DME General Manager Antonio Puente said, "The big driver is that projected revenue from data centers is also down."

The city's projections also point to further increases for water, wastewater, drainage and electric service during the next five years.

Why does it matter?

Part of the concern centers on how much power future data centers may use. Mayor Chris Watts said, "The data centers will require as much electricity, in the end, potentially as the entire city."

Council member Suzi Rumohr said one of her priorities is making sure "that we're not seeing our current ratepayers paying for, basically, the data centers' presence."

Several utility categories would also rise at the same time, along with a possible online payment processing fee, putting added pressure on residents who are already facing rising costs everywhere else. 

What's being done?

City officials have framed the increases as a way to reduce the chance of bigger jumps later on. Puente said DME's fund balance provides a cushion for emergencies and sudden cost increases, describing it as a "self-funded line of credit."

Rather than waiting for large one-time increases, Puente said smaller recurring adjustments are easier for customers to absorb. "I think just from a good financial best practice, some type of modest increase every year is a good thing to do and ... bearable for our customers," Puente said.

Residents will have several more opportunities to track the budget discussion before any final decision. The council is scheduled to hold a budget workshop on Aug. 8, a follow-up workshop on Aug. 18, a budget and tax rate hearing on Sept. 15, and the adoption vote on Sept. 22.

Rumohr warned that if the fund balance is too low when a major disruption hits, residents could face sharper rate increases later. "So if we didn't have sufficient revenue in our fund balance, and we had one of those shocks to the system and we couldn't pull from this fund, we could see much higher spikes potentially in the future if something hit," Rumohr said. 

Puente added: "So we've been very cognizant of that certainly, as we're looking at our rates to not create that kind of rate shock again."

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