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Down the drain 

Water, wastewater rates might double for Springs customers

click to enlarge Construction of a new wastewater plant, already underway, will contribute to wastewater rate hikes. - TERJE LANGELAND
  • Terje Langeland
  • Construction of a new wastewater plant, already underway, will contribute to wastewater rate hikes.

Does growth pay for itself? Not if you're a Colorado Springs Utilities ratepayer.

Residential utility customers can expect to see their water rates double in the next five years, according to a budget presentation by the city-owned utility. The increase would mainly be spent on building a new water pipeline to serve the many new people expected to flock to the Springs in the future.

The projected rate hikes have at least one member of the City Council worried about the impact on people with fixed incomes.

"These types of increases result in an absolute reduction in their disposable income," said Councilman Randy Purvis. "I think I'm going to request some reductions in those rate increases."

According to the utility company's proposed 2004 budget, which the Council has been asked to approve, the average monthly residential water bill will rise gradually from $34.07 this year, to $69.55 in 2008. An increase of $5.56, or 16 percent, is proposed for 2004.

Wastewater rates are also expected to nearly double, with average monthly charges rising from $14.75 to $29.11 over the five-year period.

Smaller increases are expected for gas and electric rates, though the average total utility bill per month would jump from $154.67 to $222.65 by the year 2008 -- an increase of 44 percent.

"They're running significantly ahead of inflation," Purvis said of the proposed hikes. In fact, a typical household would spend about 4.5 percent of its total income to pay for utilities by 2008, compared with about 3 percent now.

"It doesn't seem fair," said Dave Gardner of SavetheSprings.org, a local anti-sprawl group. "Our current residents are subsidizing growth."

The city should begin to look seriously at what growth does to residents, Gardner argues. Current growth analyses, he says, only consider the direct financial impact to the city's coffers, and not to residents' pocketbooks.

Breaking even

The main reason for the proposed water-rate increases is the construction of the Southern Delivery System, a pipeline that would bring Colorado Springs more water from the Arkansas River. Springs Utilities plans to begin buying land and to conduct engineering studies for the project starting next year.

Water could begin flowing through the pipeline by 2009, says Dick Comerford, the utility company's chief planning and financial officer. The project's first phase -- which includes building the pipeline but not future expansions of the Pueblo Reservoir on the Arkansas -- is expected to cost Colorado Springs $405 million, with a 40-year debt repayment cost of $1.2 billion.

While the pipeline accounts for most of the projected rate increases, another reason is that customers have been using less water.

Although water use has dropped, the utility company's costs of delivering water have remained about the same -- meaning that the utility has to charge more for each gallon in order to break even, Comerford says.

"We're selling fewer units of water for the same cost, and we have to recover those costs," Comerford said.

Meanwhile, wastewater rates are set to double mainly in order to pay for a new wastewater treatment plant being built on the city's north side, also made necessary by growth.

Paying for growth

Some members of the City Council, who must approve any proposed rate hikes, say they're uncomfortable with the large increases and may look for other ways to help pay for the utility company's expansion plans. This might include increased "tap fees" -- utility connection charges assessed on new homes -- or cutting expenses in the utility company's overall budget.

"I pay rates just like you do," said Mayor Lionel Rivera. "I don't personally like my rates to go up by those kinds of numbers, and I want to make sure that I do everything I can to look within the utilities budget to minimize those rate increases."

Several Council members say the city might need to raise tap fees, to make growth pay its own way to a greater degree.

"Maybe more of the burden should be borne by the new homes that are being constructed," Rivera said.

Comerford, however, says tap fees are already projected to grow by 35 percent in next year's budget. Right now, the fees run about $5,000 for each new home.

Like it or not

Although it might seem unfair that current residents should pay to provide water to future residents, that's the way the system has always worked, Comerford says. The city's residents in the 1960s and 1970s paid for utility upgrades that are benefiting the tens of thousands who've moved here subsequently, he points out.

Besides, both current and future residents will help pay for the Southern Delivery System, because the debt on the project will be paid over a 40-year period. And additional capacity would be necessary even without new residents moving into the community, Comerford maintains. Existing residents have been using increasing amounts of water, except during the last two years, when restrictions were implemented due to drought. Springs Utilities hopes to eliminate water restrictions by 2005, after which water use by existing customers will probably continue to grow, Comerford says.

Finally, growth is expected to happen whether people like it or not, Comerford points out.

"The reality is that we have a requirement to plan for the future," he said.

Developer overcharged CSU by $150,000

Colorado Springs Utilities is negotiating to recover money from a downtown developer, after an audit found the developer had overcharged the city-owned utility company more than $150,000 for an office-space arrangement.

Records obtained under the Colorado Open Records Act show that the city last February audited the utility company's office-space contract with Nor'wood Development Group, developer of the Plaza of the Rockies office complex downtown.

Springs Utilities purchased 91,000 square feet of space in the Plaza's south tower in 2001. Under a contract similar to a condominium arrangement, the utility company pays Nor'wood about $500,000 per year in fees for janitorial services, maintenance of common areas in the complex, utilities and other common costs.

Springs Utilities is refusing to release the audit itself, claiming it is exempted from the Open Records Act. But correspondence shows that according to the audit, Nor'wood overcharged the utility company $69,786 in 2001, and $86,338 in 2002.

Nonetheless, Springs Utilities isn't trying to recover all of the money, said Jerry Ludke, the utility company's facilities manager. The company has decided that by sticking to the letter of the original contract, it actually wouldn't pay its fair share of common costs -- meaning that other office-space owners in the complex would in effect be subsidizing the utility company, Ludke said. Consequently, the utility company has agreed to negotiate a new contract, under which it would pay more.

Though Springs Utilities could insist on recovering all the money it was overcharged in the past, that wouldn't be fair, Ludke said.

"We do expect that we will recover some amount of money," he said.

Terje Langeland

  • Water, wastewater rates might double for Springs customers

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