Shocking developments 

Upcoming Council decisions could have major impact on utility bills

Shocked by the hikes in your utility bill this past winter?

You ain't seen nothing yet.

Electric, gas, water and wastewater rates for Colorado Springs Utilities customers are poised to continue their steep climb over the next several years, beginning with another electric-rate hike to be considered by the city council next week.

The increases have sparked a debate over whether ratepayers are, in effect, subsidizing new development in the city, which is driving the need for costly expansions of the utility system. The biggest expansion being planned is the Southern Delivery System, a billion-dollar project to pump water from the Pueblo Reservoir to serve, primarily, the tens of thousands of new homes being planned on the eastern and northern edges of the Springs. The project is a main reason why residential water bills are set to double by 2008, compared with 2003 levels.

The city council recently appointed a special committee to examine whether developers should pay a bigger share of these costs, and the committee is due to make a recommendation next month.

But despite the direct impact on people's pocketbooks, not many citizens have attended the committee's public hearings. Dave Gardner, a local growth-control activist, is hoping that will change during upcoming meetings.

"We're hoping that a lot of people show up and express their opinions," Gardner said.

Building capital

Colorado Springs Utilities plans to spend $1.6 billion over the next 10 years on new capital projects, which are additions to the existing utility infrastructure, made necessary mainly by new development. Of that amount, developers and homebuilders will pay an estimated $500 million through fees. That leaves $1.1 billion to be paid by existing and future ratepayers.

Gardner says this amounts to a development subsidy, or "growth tax," of about $70 on each monthly residential utility bill over the 10-year period.

Utility officials and developers, however, say the capital projects carried out over the next 10 years will serve the city's needs for up to 40 years and will be paid over an equal length of time -- meaning that the tens of thousands of new ratepayers who will be added over those 40 years will share the cost.

Developers and homebuilders also argue that if they were charged for the full cost of expanding utility systems, it would drive up the price of new homes to the point where fewer people could afford them.

"The developers and the builders do nothing more than to pass on these costs to the new homebuyer," said Kevin Walker, president-elect of the Colorado Springs Housing and Building Association, who argues that the current development fees are fair and adequate.

Pay now, pay later

The committee working on the development fees is scheduled to present its recommendations to the city council on May 19. In the meantime, Council is set to consider an electric-hike increase on Tuesday, April 27.

The council has actually already approved the rate increase, which would come out to $3.20 on the average residential utility bill, effective Aug. 1. However, Springs Utilities has asked the Council to move up the effective date to June 1, saying it needs the money sooner to carry out planned system upgrades, including repairs to the aging Martin Drake coal plant downtown.

Moving the date up two months will generate $4 million in extra cash for the upgrades, said Mark Murphy, a spokesman for the utility.


Public workshop on how the cost of utility upgrades should be shared between developers and Colorado Springs Utilities ratepayers

Second floor of the Leon Young Service Center, 1521 Hancock Expressway

Thursday, April 22, 5:30-7:30 p.m.

City Council will hear public input on a proposed increase in electricity rates

Council chambers, 107 N. Nevada Ave.

Tuesday, April 27; meeting begins at 1 p.m.


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