Tuesday, May 22, 2012

Gas rates take a dive, water on the rise

Posted By on Tue, May 22, 2012 at 5:04 PM

If you're a typical utility user, your monthly bill will go down by $2.10 a month — almost enough for a foo foo coffee drink — starting in June due to rate changes approved today by the Colorado Springs City Council.

The dip is largely due to the continuing low cost of natural gas, as shown in this graphic from ycharts.com showing a history of natural gas prices since 2007.

Colorado Springs Utilities rates natural gas prices
  • Henry Hub Natural Gas Spot Price Chart.

The Colorado Springs Utilities press release talking about the decrease is below, along with mention of what lies ahead for water rates, which for the typical residential user would go up by $11.03 by January 2014 — not as bad as it could have been — under a proposal unveiled today. Utilities officials have said that future rate increases beyond that date, at one time envisioned to be 12 percent annually through 2016, will be small or non-existent.

Higher water rates are necessary to fund the $1.6 billion (including borrowing costs) Southern Delivery System, a pipeline that will increase the city's water supply by a third by bringing water from Pueblo Reservoir by 2016.

The typical residential energy bill will be reduced by $2.10 a month based on 600 kilowatt hours (kWh) of electric use and 60 CCF (hundred cubic feet) of natural gas use. This is the second gas cost adjustment decrease this year.

Also at today's City Council meeting, Colorado Springs Utilities formally proposed changes to water rates for 2013 and 2014 and requested a public hearing June 26 at City Hall. Additional funding is needed to continue construction of the Southern Delivery water project and to pay for critical maintenance and repairs of the existing water system.

Due to low interest rates, favorable construction market conditions and efficient project management, the proposed rate increases are lower than the 12 percent annual changes expected when the project was approved in 2009. If the new rates are approved by City Council, the typical residential water bill would rise by $5.04 (10.9 percent) in January 2013 and by $5.99 (11.7 percent) in January 2014. Tap water currently costs about six-tenths of a cent per gallon, increasing to about three-quarters of a cent per gallon if the rates are approved. The typical customer uses 8,228 gallons per month. See rate case details at csu.org.

The lower SDS project costs should result in smaller water bill increases in the future as well. Planned rate changes for 2015 and 2016 are likely to be much lower than the projected 12 percent and may be eliminated altogether.

City Council today also approved a measure to lower the cost for non-profit groups to obtain water service for the purpose of community gardening. The number of formally established community gardens has grown from three in 2007 to more than 20 today.

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