Colorado Springs Utilities presented a formal rate case to the City Council Tuesday, asking for two consecutive rate hikes of 12 percent each that would go into effect in 2011 and 2012 and would be used to begin construction on the $1.2 billion Southern Delivery System.

Jerry Forte, chief executive officer of the municipal utility, said the pipeline is needed not only to ensure a water supply for future customers, but also to create hundreds of jobs. “It’ll be an economic boost to the region,” he said.

The City Council is expected to vote on the rate hikes on May 11. Also on Tuesday, the council gave the green light to a water conservation pilot program developed by Utilities to help the city’s park department get the most out of its water dollars.

In addition to offering a special conservation rate, Utilities plans to expend $500,000 on the program. They’ll consider the time of day that parks are watered, where drought-resistant shrubs and grasses could be planted, and installing low-cost hardware such as rain sensors and sprinkler heads.

The two, 12-percent rate hikes are the first of six planned increases through 2016, Utility officials have said. They will come on top of two increases totaling nearly 50 percent that went into effect in 2009 and 2010.

Numerous people spoke at the hearing in support of the increases, but one businessman called them “madness.”
Dan Light, who operates the Splash Car Wash, at 5814 Tutt Blvd., said his water bill got so high he had to lay off off an employee. “You probably didn’t notice another job lost. He was just another blue-collar employee,” he said.

“If this spending madness doesn’t stop, we’re going to be in a world of hurt.”

Walter Lawson, a retired landscape architect, questioned whether the $1.2 billion represented the full tab of the SDS project, suggesting that true costs ultimately would be in the $3 billion to $4 billion range. “My question is, Why haven’t we been told the whole story?”

William Cherrier, Utilities’ chief planning and finance officer, confirmed that the tab for the first phase of the pipeline, when interest on the debt was factored in, could be $3 billion or higher over the next 40 years.

A second phase of the project, which would involve the construction of reservoirs, would push the numbers even higher, councilman Tom Gallagher said. That phase is not scheduled until the 2020-2025 time frame, Utilities’ spokeswoman Janet Rummel said.

Utility officials said they needed to get approval for the 2011-2012 rate hikes now in order to give assurances to the bond rating agencies that it can pay back the money that it’s going to borrow through the issuance of bonds.
If the rate hikes are approved by the City Council, the average water bill would  go from $36.86 to $41.28 in 2011 and then to $46.24 in 2012, Utilities officials said.

And it won’t stop there. Annual rate hikes of 12 percent are planned for 2013-2016 to pay for the pipeline and repair other aging infrastructure. When the compounding factor is taken into account, water bills will probably be double at the end of that period, Utility officials have acknowledged.

Call the writer at 476-4825.