Newton to repeal IRUA water rate increases and raise resident water bills

Newton City Council is repealing its past water rate increases for Iowa Regional Utilities Association (IRUA) — which was a controversial decision made last year that resulted in a lawsuit between the utility company and the city — but at the same time council is on track to raise water bills for all property owners in town.

All three readings of the ordinance need to pass before the council can adopt it. Officials approved the first reading at their May 19 meeting. While the council did not speak of the new IRUA water rates, elected officials did comment on the increased rates for residential and commercial properties in Newton.

By fiscal year 2026, minimum usage residential customers will see their monthly water rates increase from $11.45 to $14.89, an increase of $3.44. Excess usage charges for every 100 cubic feet over 200 cubic feet will increase from $2.87 to $3.73, an increase of 86 cents. But rates will increase again the following year.

Editor’s note: A previous version of this story included incorrect water rates for FY27. They have since been corrected.

By fiscal year 2027, minimum usage residential customers will see their monthly water rates increase from $14.89 to $16.37, an increase of $1.48. Excess usage charges for every 100 cubic feet over 200 cubic feet will increase from $3.73 to $4.10, an increase of 37 cents. Of course, these rates only apply to inside city limits.

Here is a rate schedule that clearly defines how rates will change for residential and commercial customers inside and outside city limits.

According to city documents, Newton has begun investing in critical infrastructure upgrades to maintain a safe and reliable water system. Many of the system components have reached or exceeded their intended lifespan, and timely improvements are essential to avoid service disruptions and emergency repairs.

The cost of infrastructure improvements is expensive, and the city argued inflation has significantly impacted the cost of chemicals, materials, equipment and labor required to operate and maintain the system. The city said these economic pressures have increased financial demands on the water utility.

Newton also argued water rates in Newton have not been adjusted in over six years. But since then operational costs have risen while revenues remain static. Council member Randy Ervin noted the city has also increased its solid waste collection rates, which is added on to resident water bills.

Ervin reasoned the increases are needed to keep up with inflation and that they may not be as high as they seem. He said it was time Newton caught up.

“If you take a look at how long it’s been since we’ve had a raise, and then you look at this, and the first thing you see is, ‘Oh, we’re gonna get another raise.’ Well, in some of these cases, it’s $1.49 a month or maybe $2 a month,” Ervin said. “This is not a huge, huge increase in your water bill.”

Fellow council members agreed the water rates have been very low compared to other cities. Council member Melissa Dalton said they will still be low.

Initially, IRUA was charged as low $1.09 per 1,000 gallons for zero to 31 million gallons a month to as high as $1.23 per 1,000 gallons for anything above 93 million gallons. Newton officials say they conducted a rate study and determined an increase to IRUA’s rates were necessary.

The rates last year changed to $9.73 per 1,000 gallons for a minimum of 0 to 31 million gallons a month; $9.73 per 1,000 for the next 14 million gallons, $9.79 for the next 48 million gallons; $3.27 per 1,000 for a minimum of 93 million gallons a month; and $3.34 per 1,000 for anything over 93 million gallons.

Since these past rates for the lower volumes increased by nearly 800 percent, the utility company was incentivized to purchase the higher volumes at a discounted rate.

Ronald Dunsbergen, the president of the IRUA Board of Directors, argued in a past statement to Newton News that the utility company only purchased a minimum of 93 million gallons once every three months over the past three years. Which means IRUA would likely have to pay the higher monthly minimum.

According to the new water rates effective May 1, 2025 to June 30, 2026, IRUA will have to pay $2.59 per 1,000 gallons for a monthly minimum of 75 million gallons to a monthly maximum of 100 million gallons. The rate will increase to $2.76 per 1,000 gallons effective July 1, 2026 through June 30, 2027.

All rate increases after June 30, 2027 shall be, in percentage terms, equal to or less than those applied to residential customers for the term of the contract. Any usage exceeding the allotted monthly maximum will be charged at twice the prevailing rate at that time.

Matt Mahler, CEO of IRUA, said in a statement that the utility company and the city are making progress working towards a settlement to the ongoing litigation, and the proposed rates being considered by the city council are consistent with what has been discussed in conversations between the parties.

“IRUA is actively evaluating its financial models considering the city’s proposed rates, and is working to mitigate the effect that proposed rates would have on the bills of IRUA’s customers as much as possible,” Mahler said of IRUA customers, whose rates are set annually by the board of directors.

The earliest any rate decision would be implemented for an IRUA customer would be Jan. 1, 2026. IRUA will communicate any rate decisions directly to customers before any new rates go into effect.

Settlement negotiations between IRUA and Newton are still ongoing.