City Council to discuss utility rate increase |

City Council to discuss utility rate increase

John Gardner
Glenwood Springs, CO Colorado

GLENWOOD SPRINGS, Colorado ” City staff’s recommendations for 2009 water and sewer rate increases remain in line with 2006 analysis despite a recent annual draft report which stated fees may need to be increased significantly to cover higher operating and future project expenses.

According to Glenwood Springs Public Works Director Robin Millyard the recommendation from city staff is a 10 percent increase for water fees and a 20 percent increase for sewer customers. Electric rates are expected to raise only 4 percent for Glenwood Springs Electric Company customers.

The city undergoes an annual report to determine if the projections made in 2006 are sufficient and determine if the city is receiving too much or too little revenue.

The latest review stated that water rates for financial year 2008 came up $139,000 short of projections from the previous year’s study, despite a third consecutive 10 percent increase in May 2008. While water revenues were down, operating and maintenance expenses were $171,000 higher than originally projected as well.

Millyard explained that many variables contribute to the shortfall and include everything from a decrease in customer consumption to unforeseen cost increases for chemicals used in treating water.

The report stated that exact reasons for the lower than expected revenue “was beyond the scope of the analysis,” and that it appears less water is being sold than was anticipated by the last study.

Consumers using less water may be good news in some ways, but it’s not so good for the water department.

“It’s good for people to conserve water but it also results in us taking in less revenue,” Millyard said. “So, it’s kind of a double-edged sword.”

The study showed that the May 2008 rates do not appear to be sufficient to meet the utility’s goals for funding future capital expenditures while continuing to pay for operating and maintenance cost increases since the last study was completed.

On top of the 10 percent increase previously planned for 2009, the study said that an additional increase of 17.4 percent would be needed to restore the net revenue to the amount projected in the study.

However, Millyard said that customers should not expect that high of an increase and reaffirmed that the increase would likely remain at 10 percent this year.

“To hit the targets set in the 2006 analysis it would be necessary to do (the additional increase) now, but we are taking the 10 percent to council,” Millyard said.

The actual revenue collected for 2008 was $2,099,950.

With the new plans for the wastewater plant in Glenwood, the report stated that a 47 percent rate increase, split over a three year period, for Glenwood sewer customers would be necessary to cover the projected shortfalls.

The report stated that the 20 percent increase in 2008 recovered sufficient revenue to cover actual expenses, based on financial year 2008 unaudited results. However, by 2011, revenues were not expected to be sufficient to cover projected operating expenses and debt service on proposed capital improvements.

But Millyard said that the current report’s figures were based on a $37.5 million estimated cost of the new wastewater treatment facility, which he expects could be less expensive given the current economic climate. He said that construction and material costs could decrease by the time the project is put out to bid this summer, and that the city is also looking at alternative funding avenues through grants that would ultimately effect the rate increase for 2010.

“Anything we can do to offload costs from the rate payers helps our bottom line and decreases the need for the rate increase,” Millyard said.

City Council is expected to discuss the annual rate increases at their April 16 meeting.

Contact John Gardner: 384-9114

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