Lynnwood staff warn of possible water bill increases amid EverettAlderwood rate dispute

Public Works Director Bond told the Lynnwood City Council that a disputed wholesale rate proposal from the City of Everett, combined with a newly approved 12% utilities tax, could materially raise what Lynnwood pays for purchased water and, by extension, what customers see on their bills.

Bond said the Everett proposal that surfaced on March 31, 2025 would have raised Everett's wholesale charge from roughly $1.00 per CCF to $2.26 per CCF; a subsequent notice in 2026 added an 8.2% adjustment that would translate to about $2.44. Bond said Alderwood Water and Wastewater District has refused to pay the 2025 increase and the two entities are in nonbinding arbitration.

"If Everett got their way," Bond said, "the full increase would make that from a dollar 71 to $3.20," when Everett's proposed wholesale rate and Alderwood's add-on are combined. Bond presented a hypothetical bimonthly bill currently around $68.66 that could rise to about $91.92 in the doomsday scenario, an increase of about $16.39 per bimonthly bill.

Bond also described a possible retroactive true up that would apply the higher wholesale rate to past consumption back to 2024. He estimated a potential true-up liability of about $1,700,000 and said the city has set aside about $1,500,000 as a contingency.

Bond explained the root of Everett's proposal: a planned reservoir replacement project (two new tanks of 8 and 15 million gallons) with an estimated cost of $80 million and Everett's decision to allocate roughly 80% of that cost to wholesale customers, a split Alderwood disputes. Everett's City Council also approved a 12% utilities tax on wholesale purchases that Bond said would go to Everett's general fund and take effect Aug. 1.

Councilors pressed Bond on timing, contingency planning and whether a large true up could be forced into the city's general fund. Bond said the utility has budgeted and set aside contingency funds and that the matter is contained within the utility fund, not the general fund; he said Alderwood is actively advocating for wholesale customers in arbitration.

Bond advised the council he plans to return with updated rate recommendations in the fall and said staff will monitor arbitration and regional coordination with Alderwood and neighboring jurisdictions.

What happens next: Bond said he expects to be back with proposed adjustments to preadopted rates when the council discusses rates and the utility budget; Alderwood and Everett will continue arbitration and staff will track rulings and timeline.