Springs City Council to tackle Part 2 of Utilities rate changes

November 18, 2013 Updated: November 19, 2013 at 4:26 pm

In a twist of events, the Colorado Springs City Council found itself voting on a gas rate decrease last week and now will consider a proposed increase this week.

If it seems confusing, it is.

"You voted on a decrease, now you will vote on an increase - I don't understand it," said Jerry Murphy, a resident who spoke during a public hearing Nov. 12 on the proposed gas rate increases.

The gas bill is divided into sections - one is a fuel price, which is about 65 percent of the total bill, and one is a base price, which is 35 percent of the bill. The fuel price is increased or lowered based on the market. At the moment, gas prices are dropping and the lower rates are passed to the customer, said Bill Cherrier, Colorado Springs Utilities' chief planning and finance officer.

Council voted 8-1 to approve the rate decrease, which is about 90 cents per month for the typical user. The change is effective Dec. 1.

But Colorado Springs Utilities has growing capital costs and is seeking an increase in the base gas rate to help cover those expenses, Cherrier said. It is asking for 2.2 percent increase, or $1.05 per month for the typical user. The increase would generate $2 million in 2014 and the money would be spent on pipelines, inspections and projects connected to more strict federal regulations.

If approved, the gas rate increase, coupled with last week's decrease, would translate to an increase of 15 cents per month for a typical user. Council also will consider a 3.4 percent increase in electric rates, which if approved would be $2.33 per month, or $27.96 a year, for a typical user.

The proposed rate increases are built into the 2014 Utilities $1.15 billion budget, which Council tentatively approved Nov. 12. The electric rate increase would generate $12 million in 2014 and be spent on capital projects, including a $51 million project at Martin Drake coal-fired power plant.

Council member Helen Collins raised concerns that the $1.15 billion Utilities budget includes a salary increase for more than half of the Utilities employees while asking customers to pay more.

"That doesn't meet the common sense factor," she said. "There are people hurting - a lot are living check to check."

Cherrier noted that there is billing assistance through Project Citizens' Option to Provide Energy (COPE), a locally funded program, and Low income Energy Assistance Program (LEAP), a federally funded but locally administered program, to help customers pay their bills, Utilities also offers billing counseling and a payment plan.

Project COPE accepts private donations and grants, and Utilities matches the money up to $500,000. In 2012, Project COPE raised $255,200 in donations, matched by Utilities, and provided assistance on utility bills to 3,754 customers.

"Every time you make a rate increase it affects the bottom line of COPE: If people can't pay their utility bills, they have to seek help," said resident Paul Kleinschmidt, who asked council to vote "no" on raising electric and gas rates.

There is no telling how the proposed gas rate increase would affect the need for the LEAP program, said Bradd Hafer, spokesman for Discover Goodwill of Southern and Western Colorado, which together with El Paso County administers the program. LEAP is only for heating bills and is used from November through April.

"We cannot forecast from year to year," Hafer said.

Program participation depends on how much money the county receives from the state and how many residents apply. Last year, 8.494 Colorado Springs Utilities customers qualified for LEAP. That is down from the previous year, when 9,308 Colorado Springs Utilities customers qualified for LEAP. The county should find out its 2014 LEAP funding in January or February, but it will not be adjusted for the proposed rate increase, Hafer said.

Goodwill began accepting applications Nov. 1. In the first week, 541 Colorado Springs Utilities customers applied.

Resident Johanna Glover told the Council some of her neighbors already struggle to pay their utilities bills.

"Once capital improvements are made, are we going to see a decrease in rates?" asked Glover, who spoke at the Nov. 12 public hearing. "There are people who struggle who might not meet requirements of LEAP and COPE."

Utilities has outlined a five-year plan for capital needs, which likely will include electric rate increases each year for the next five years.

"We have substantial capital requirements for the next several years," Cherrier said. "All need to be complete by 2017."

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