The price tag for backup power at the San Antonio Water System has ballooned to about 340,000,000 dollars, transforming what began as an emergency resilience push into one of the utility’s most expensive infrastructure programs. The surge in costs is reshaping long term planning at SAWS and sharpening questions about how much more customers will ultimately pay to keep taps running when the grid fails.
At the center of the debate is a fleet of large diesel generators that SAWS is racing to install at critical facilities across the city, a project driven by state law and by the memory of deadly winter outages. The scale of the investment, and the way it has grown, is now colliding with a parallel conversation about future rate hikes and how to spread the burden of hardening San Antonio’s water system against the next deep freeze.
From winter crisis to a 340 million dollar mandate
The backup generator program traces directly to a Texas law that followed the catastrophic winter storms that knocked out power and water service for days across the state. That statute requires large utilities to ensure they can maintain essential water and wastewater operations even during extended grid failures, which pushed SAWS to commit to a sweeping package of new generators. The agency is now planning Tier 4 diesel units at nine major sites, a scale that reflects both the size of the system and the political pressure to avoid a repeat of frozen pipes, empty reservoirs and boil water notices.
What began as a shared initiative with the city’s electric utility has steadily grown in scope and cost. Earlier approvals covered a joint plan by San Antonio Water System and CPS Energy to buy and install generators worth about 202,000,000 dollars so that both water and power providers could keep service flowing through another harsh Winter. That collaboration set the foundation, but as SAWS refined its own needs and design standards, the total commitment for its side of the project alone has climbed to roughly 340,000,000 dollars, a figure that now dominates its resilience spending.
Tier 4 generators and a complex build out
SAWS is not simply buying off the shelf engines, it is commissioning Tier 4 diesel generators that meet stricter federal emissions standards and can run large pumping stations and treatment plants for extended periods. Design work for the first three of the nine planned sites is already complete, and the utility has signaled that the full Tier 4 program, once all locations are built out, will cost about 340,000,000 dollars in total Tier. That scale reflects not only the hardware but also the concrete pads, fuel systems, switchgear and control upgrades needed to integrate the machines into existing plants.
The earlier joint procurement with CPS Energy illustrates how complicated that integration can be. In that agreement, San Antonio Water System and CPS Energy approved a plan to purchase and install generators worth 202,000,000 dollars across multiple facilities in SAN ANTONIO, with a multi year schedule to install all the generators. As SAWS has layered the new Tier 4 program on top of that earlier work, the complexity of coordinating construction, maintaining service and meeting environmental rules has become a major driver of both cost and timeline.
Rising project costs and the pressure on water bills
As the generator budget has swelled, SAWS has been candid that higher operating and capital costs will eventually show up on customer bills. Utility leaders have already warned that as costs keep rising, water bills will also have to go up, even if the exact impact varies by customer class and usage. They have stressed that this does not mean all of the rates are going up by the same percentages, and it does not mean that all bills are going up by those percentages, but the direction of travel is clear as they weigh how to recover the cost of new costs.
The financial strain is not coming from generators alone. SAWS is also facing major rehabilitation needs at aging water and wastewater facilities, which are competing for the same pool of rate revenue. In public discussions, SAWS Chief Financial Officer Doug Evanson has pointed to the need to rehabilitate two of the SAW facilities as a primary driver for a potential rate increase in 2026, even as the utility keeps its current rate in place until early 2026 while it refines its long term plan Oct. The generator program, layered on top of those rehabilitation projects, is tightening the financial vise on both the utility and its customers.
Rate decisions delayed, but not avoided
For now, SAWS has chosen to delay a formal debate over new rates, even as the generator budget keeps climbing. The utility has said it will hold off on a full rate change discussion until 2026, giving staff time to complete a detailed cost of service study that will map out how much revenue is needed and how to distribute that burden among different customer groups. Once the cost of service study is completed by early 2026, SAWS leaders will determine the amount of any proposed adjustments to water and sewer charges and will direct customers to more information at a dedicated Once the website.
The decision to wait does not mean the issue is going away. A separate notice from SAWS reiterates that once the cost of service analysis is finished, the board will have to confront how to pay for the generator build out, the rehabilitation of key plants and other capital needs, all within the constraints of what customers can afford. That same communication underscores that SAWS is intentionally deferring the rate debate until the study is complete, but it also directs residents to saws.org/rates2026 for updates, a sign that the utility expects the conversation over SAWS rates to intensify once the numbers are finalized.
What customers should watch in 2026
As 2026 approaches, the key question for households and businesses is how the 340,000,000 dollar generator program will be folded into the broader rate package. SAWS has already signaled that the cost of hardening the system, combined with rehabilitation of two major SAW facilities, will likely require a rate increase once the current structure expires in early 2026. In public briefings, SAWS Chief Financial Officer Doug Evanson has framed the coming proposal as a balance between reliability and affordability, with the generator program one of several large line items that will shape the final SAWS request.
Customers should also remember that the generator effort is part of a broader resilience strategy that began when San Antonio Water System and CPS Energy jointly approved the 202,000,000 dollar generator plan in SAN ANTONIO to prepare for the next Winter crisis. That earlier decision, documented in a separate account of how San Antonio Water System and CPS Energy agreed to purchase and install all the generators, shows that the current 340,000,000 dollar figure is not an isolated spike but the latest stage in a multi year push to keep critical services running when the grid fails SAW. As the cost of that resilience keeps rising, the political and financial stakes for how SAWS structures its next rate proposal will only grow.
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