Glenwood sewer rates to increase 30 percent in June | PostIndependent.com

Glenwood sewer rates to increase 30 percent in June

John Gardner
Post Independent Staff
Glenwood Springs, CO Colorado

GLENWOOD SPRINGS, Colorado – Glenwood Springs wastewater customers can expect a 30 percent increase in their sewer bill beginning in June.

The increase of the city’s water and wastewater rates for 2010 was unanimously approved by Glenwood Springs City Council at its May 20 meeting.

The sizable increase in wastewater rates will also be accompanied by a 5 percent rate increase of the treated water for 2010.

The increases are the fifth in as many years and were designed to generate revenue to pay for capital improvement projects, most notably the relocation of the city’s wastewater treatment plant, which cost $33 million. The total cost includes $22.3 million for construction of the wastewater facility. Approximately $4.6 million has paid for construction of the force main that will connect the lift station at the current site on Seventh Street to the new facility in West Glenwood Springs to the south of the Colorado River, and for construction of the access road.

The remaining $6 million covers engineering and associated costs, and a portion will also cover demolition of the existing facility on Seventh Street, according to City Manager Jeff Hecksel.

A 2010 Review and Utility Operating Results report issued by Nebraska’s JK Energy Consulting LLC suggested that a 61 percent rate increase is needed over the next two years to cover the projected operating expenses and debt service acquired to pay for the new facility. The report stated that the increases are due in part because of the nearly $21.5 million in capital expenditures related to the wastewater treatment plant that will be issued over the next two years.

The projected debt expenses for a new wastewater treatment plant were estimated at $1.93 million for fiscal year 2011, an increase of approximately $449,000 per year from the 2006 water and wastewater rate study projection.

JK Energy also projected a revenue shortfall for 2011 of $424,000 if the city stayed with the rate recommendations of the 2006 study.

To make up the projected shortfall the city will likely have to increase the wastewater rates by another 30 percent in 2011, according to Glenwood Springs public works director Robin Millyard.

However, Hecksel said that another 30 percent may be avoided if water consumption increases and new customers are added to the city’s system.

Hecksel said that water and sewer revenues were down in 2009 due to economic activity and above average precipitation.

According to Hecksel, the city has no choice but to raise the rates to pay for the costs of the new plant because a rate covenant included in the financing agreement with the Colorado Water Resources and Power Development Authority requires it.

“They have to ensure that the city remains solvent enough to pay the loan back,” Hecksel said. “We want to make sure that we have enough in reserve and on hand to make the debt service payments, too.”

According to Glenwood Springs Mayor Bruce Christensen, the city was aware that these high rate increases would eventually come as the start of the wastewater project drew near.

“We absolutely knew that was going to happen when we decided that we were going to spend $30 million and have a way to pay for it,” Christensen said.

According to the 2006 Water and Wastewater Cost of Service Analysis and Rate Study, it was recommended that seven annual rate adjustments of 20 percent, from 2006 through 2010, and 15 percent in 2011 and 2012, be implemented. To date, those recommended rate adjustments have been made. But the rates will have to be increased due to the shortfall in revenues and the added debt.

The annual report, issued in 2009, stated that water and wastewater rates proposed in the 2006 water and wastewater study “would not generate sufficient revenue.” That report also indicated that wastewater rates should be increased 47 percent more than was originally projected through 2011 to ensure sufficient revenue to pay for the added expenses. However, council chose not to raise the wastewater rates by that amount in 2009. Instead, council chose to go with the recommendations in the 2006 study of 10 percent and 20 percent, respectively, for water rates and wastewater rates.

Glenwood Springs serves approximately 3,510 water and 2,570 wastewater customers in and around the city. Out-of-city sewer customers will actually see a slight decrease in their wastewater bills, according to Millyard. Council agreed to return the out-of-city customers to a rate 1.5 times the in-city customers’ rate. The rate was increased to 2.23 times the in-city customers’ rate in 2007.

“So, it’s actually a slight decrease in the out-of-city rate,” Millyard explained.

Comparatively, Glenwood Springs’ increased rates will be similar to neighboring communities. According to a report issued by Millyard, for 2,000 gallons per month, a Glenwood resident will pay $47.84 for wastewater service, compared to Aspen at a reported $49.46, Carbondale at $16.61, New Castle at $32.50, Silt at $44.08, and Rifle at $30.88.

Councilman Dave Sturges told his fellow councilors that while this may be an extra cost of the services the city provides, it has been planned for and it’s a first step in a major process that is greatly needed.

“Moving this facility out of its current location is a huge benefit,” Sturges said. “People may not think it is when they get their first bill, but it is a major, long-range first step that we’ve taken.”

jgardner@postindependent.com


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