A long list of capital projects, employee raises, increased debt and electric and gas rate hikes are part of the proposed $1.15 billion Colorado Springs Utilities 2014 budget - a $95 million increase over 2013.
Capital projects dominate the 2014 utilities budget with more than $391 million planned for construction, including $229 million for two massive projects, the Southern Delivery System and bringing the coal-fired Martin Drake and Ray Nixon power plants up to federal Environmental Protection Agency standards.
To the residents, whose utility bills contribute 78 percent of the total utilities operating budget, it means rate hikes to pay for those capital projects. A typical residential customer can expect a $9.37 monthly increase in their utility bills next year, which includes $5.99 for a water rate increase that was approved last year and kicks in Jan. 1. The combined rate increases will bring in an additional $31 million.
Colorado Springs Utilities Chief Planning and Finance Officer Bill Cherrier presented the proposed 2014 utilities budget to the City Council, which doubles as the utilities board of directors.
The proposed budget for the four utilities - gas, electric, water and wastewater -- is a culmination of 30 hours of budget committee meetings with council members who already shaved $20 million out of the proposed capital improvement budget to avoid even higher electric rate increases.
"We want to be a low cost utility," said council member Joel Miller, who heads up the utilities finance committee. "But we have to measure that and balance that with reliability and the long-term impact to infrastructure."
New federal emission regulations are the reason for the electric rate increases, which will generate $12.5 million in 2014. But getting the Drake and Nixon plants up to par is a three- to four-year program, and that means electric rates likely will increase each year until 2018 to cover the costs, said Bruce McCormick, chief energy services officer.
In 2014, utilities will spend $51.6 million on the coal plants to reduce carbon dioxide emissions.
Natural gas rates will go up 5 percent in 2014 and generate about $2 million in 2014. The money will be spent on pipelines and inspections, projects that are connected to stricter federal regulations, McCormick said.
Utilities is nearing the finish line with one of its largest projects - SDS, a 53-mile water pipeline from Pueblo Reservoir to Colorado Springs. It's a $1 billion project that started four years ago and amounted to four straight years of 10- and 12-percent water rate increases. In 2014, utilities will spend $178 million on SDS and expects to complete the project in 2016, said Gary Bostrom, chief of water services.
"This is the last significant water rate increase we anticipate for the SDS project," Bostrom said.
But even after the major construction projects are complete, residents shouldn't count on rate decreases. Earlier this year, utilities issued $130 million in bonds for the major capital projects with a 30 year pay back. That puts utilities total debt up to $2.4 billion compared to $4 billion in assets. And that means 16 percent of a customer's utility bill goes strictly to paying down the debt.
Still left to haggle in the proposed 2014 utilities budget are two relatively small budget items. Council will review a proposed $761,500 budget set aside for community investment, which includes money for nonprofit sponsorship, economic development and the Community Focus Fund. Of that budget, the Colorado Springs Regional Business Alliance receives $240,000. Some council members question that expense and expect to discuss it at its Nov. 12 budget work session, which begins at 9 a.m.
Also under consideration is whether utilities should extend a discounted water rate for city parks. In play is $1.13 million the city needs to water its parks at the same level it watered in 2013. That money is not in the proposed 2014 city budget and the city is looking for utilities to cut it a deal. That also will be discussed Nov. 12.
City Council work session: 9 a.m. Nov. 12 in City Hall, 107 N. Nevada Ave. Council will discuss the proposed Community Investment budget and water rates for the city’s parks. At 1 p.m. council will hold a public hearing about the proposed electric and gas rate increases. Council also is expected to vote on the 2014 Colorado Springs Utilities budget.