Pace of water rate hikes will slow in 2017-2019, Utilities says

May 13, 2010

The pace of water rate hikes to help pay for the $2.3 billion Southern Delivery System will slow greatly toward the latter part of the decade, a financial forecast by Colorado Springs Utilities shows.

The city-owned utility plans to seek a 3 percent rate increase in 2017, no increase in 2018 and a 2 percent rate increase in 2019, the forecast shows.

Utilities spokesman Dave Grossman emphasized that the proposed increases are based on assumptions that could change dramatically in coming years. “A dry or wet summer can change the amount of revenue by millions of dollars,” he said.

The increases will come on top of six planned 12 percent rate hikes scheduled for 2011 through 2016. The six increases come after a 40.6 percent rate hike that went into effect in 2009 and a 6.2 percent increase that went into effect on Jan. 1.

In sum, that means that water bills for CSU customers could more than triple from 2008 to 2019, with the typical residential bill going from $24.67 to $76.37. Utilities officials have said the bulk of the rate hikes will pay for SDS, while the rest will be used for repairs and upgrades on existing facilities.

CSU officials have said the first phase of the SDS project, a 62-mile water pipeline that is expected to bring water from Pueblo Dam to Colorado Springs, will cost $2.3 billion in construction and financing charges over a 40-year period. A second phase, which involves the construction of two reservoirs, pumping stations and a treatment plant expansion, could cost almost as much, according to documents and officials. That phase, which will likely result in additional rate hikes, could begin as early as 2020 or as late as the 2025-2030 time period, Grossman said.

Thomas A. Arnold, an economist who served for eight years on the Utilities Policy Advisory Committee, a citizen panel appointed by City Council acting as the Utilities board, said SDS will collectively cost the community $55 million annually over the next four decades. Utilities officials say the project will be an economic engine, creating as many as 700 jobs at the height of construction.

CEO Jerry Forte has acknowledged that the rate hikes will be a burden on ratepayers, but points out that Colorado Springs, unlike Denver and Pueblo, is not located near a major river. The pipeline is needed to ensure the city has an adequate water supply in the future, Forte and the City Council have said.

Earlier this week, the utility received the green light from City Council for the first two of the six planned 12 percent rate increases. They will take effect in 2011 and 2012.

Call the writer at 476-4825.

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