SDS water rate hikes may be lower than planned

April 18, 2012
photo - Construction of the Southern Delivery System pipeline Photo by Daniel J. Chacon
Construction of the Southern Delivery System pipeline Photo by Daniel J. Chacon 

A recurring complaint among some Colorado Springs Utilities ratepayers about the 62-mile Southern Delivery System water pipeline is that it would drain their wallets.

After all, residential water bills were expected to double because of SDS.

But Utilities officials announced Wednesday that a series of 12 percent water rate increases planned through 2016 to pay for SDS will be lower than anticipated and that the sixth and final planned increase may not even be necessary.

“The best word I can think of is thrilled,” City Council President Pro Tem Jan Martin said.

Councilman Tim Leigh said the low cost of borrowing and Utilities’ ability to manage contracts efficiently helped drive down costs.

“We have assured our children and grandchildren abundant, high quality water and the attendant economic vitality opportunities that come with that precious resource at half that price,” he said.

Under the new rate schedule, the average residential water bill once SDS is complete is expected to be about $60 instead of the $80 a month previously anticipated. Before any SDS-related increases were added, the average residential water bill was $40 a month.

The lower costs for SDS are expected to cut the original projected rate increases by 50 percent SDS spokeswoman Janet Rummel said.

The historic water project will pump water uphill to Colorado Springs from the Pueblo Reservoir. SDS, now estimated at nearly $1 billion, excluding financing costs, will serve Colorado Springs and neighboring Fountain, Security and Pueblo West.

The Colorado Springs City Council approved the first two water rate hikes in May 2010. The first increase went into effect last year and the second one kicked in Jan. 1.

Utilities CEO Jerry Forte said the next two planned 12 percent water rate increases will “likely” be closer to 10 percent each and the fifth is “likely” to be less than 10 percent.

The sixth and final increase “may not even be needed at all,” Forte said.

“We’re really, really excited. This is a result of the economy we’re in, the time we’re building it, the cost of financing, the bids we’re seeing back. But I don’t want minimize the program management to value engineering. It’s just everything,” Forte said.

“We’ve just hit as sweet a spot as we could to build this project,” he added. “Not only does it provide all these savings to our ratepayers, but those savings continue for the next many, many years.”

Councilman Bernie Herpin agreed.

“That’s money that our ratepayers can now spend on other things,” he said. “It just shows how dedicated our staff is to trying to accomplish this very complicated, very expensive project under budget and save money for our citizens.”

However, the project faces other hurdles.

Pueblo District Court Judge Victor Reyes last week set aside a vital water quality certification and remanded it back to the state for further review.

Utilities said this week that it plans to appeal the judge’s ruling. On Wednesday afternoon, the council held a special meeting in closed executive session to apparently talk about the matter with City Attorney Chris Melcher and outside legal counsel David Robbins, among others.

Contact Daniel Chacón: 476-1623

Twitter @danieljchacon

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