Denver Water unanimously approves 5.5 percent rate hike

Categories: Business, News

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While (appropriately) pouring over glasses of ice water at their meeting this morning, the members of the Denver Water Board voted unanimously to support a 5.5 percent hike in the city's water rates. After four months of public discussion, the decision comes as a direct result of analysis indicating the current budget is not supported by the current rates.

"Our rates are insufficient to meet our requirements over the next ten years, so we wanted to create a financial plan to operate in the correct capacity," Todd Cristiano, Denver Water's manager of rates administration, told those assembled at the meeting. Beginning in late May, the board ran approximately twenty scenarios before slimming down to four and then selecting the recently approved option. "The most feasible way to realign our budget is through an increase in the rates our users pay," he added.

Under the new rate hike, which will begin on January 1, the increase will remain equal across the board. Based on the projected revenue requirement for the rates section of the budget in 2012, the rate adjustment will recover the total revenue requirements while serving as a transition model for future rate adjustments. Even with the 5.5 percent increase, Denver Water will be drawing on capital reserves in order to make up the difference, board vice president Penfield Tate said.

"Are we all right drawing from the reserves?" he asked the gathering.

"This year," joked treasurer Usha Sharma.

Although the meeting included space for public response, only one man aired complaints about the proposal. His concerns focused primarily on the difference between Denver Water's services inside and outside of the city limits. On both sides of the boundaries, the increase will maintain the same ration in price structures. Based on an annual bill for a uniformly average 105,000 gallons of water, the total bill would increase from the current $356.38 by 5.5 percent to $375.81. The average monthly increase, then, is about $1.62.

"Our current methodology doesn't make any sense," first vice president Greg Austin said. "Our model was based on numbers that were assumed and incorrect, and it turned out to be untenable. That leaves 2012 as a transition year that maybe nobody's happy with until we get a final model solidified, but it's an important transition."

Denver Water, which is the largest system in the region, serves the most customers in its area, a fact that includes the sale of treated and untreated water to other local communities, such as Arvada. Comparing Denver Water's projected 2012 rates to the current rates of its peers on the Front Range, Denver would move from the role of the second cheapest company to the fifth on the list in an analysis of single-family residential use.

'There's a ripple effect in terms of our rate structure," said Tate. "Our rates affect their rates down the line, and theirs don't usually affect ours. At the end of the day, the most important thing is that when you turn on the spigot in your house, something comes out.

"And there's a cost associated with that."

Look below to see a graphic of Denver Water's 2012 revenue requirements.

Denver Water Board Proposed 2012 Rates

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My Voice Nation Help

I was the one man that commented to the Board.  i am the manager of Platte Canyon Water and Sanitation District and Southwest Metropolitan Water and Sanitation District.  the comments were submitted on behalf of several hundred thousand suburban Denver Water customers.  the comment included the fact that the adopted rate proposal unfairly and inequitably shifts $4,000,000 in costs from Denver citizens to suburban water customers.  The cost model that now seems to be inaccurate has been used for over 20 years.and has heavily benefited the citizens of Denver until recently.  I would be pleased to discuss these issues with the Westword reporter at his or her convenience. 

Robert Chase
Robert Chase

I will again urge my radical plan:  set a moderate conservation goal in gallons per month per person, then charge progressively higher rates of those who choose to use more.  In the present circumstance, the significant fraction of customers who use water moderately should be spared any price increase and those who use the most water should bear the brunt.

Captain Koons
Captain Koons

"His concerns focused primarily on the difference between Denver Water's services inside and outside of the city limits."Be aware that this is a HUGE deal to outside city customers. The technical advisory committee for DW distributors are up in arms about this new approach to rate setting, which basically ignores equity investments made by outside city customers into DW over the past 20 or so years. Inside city customers, according to the contract-specific methodology, were supposed to have a much greater water rate increase this year compared to outside city customers. This, unsurprisingly, didn't sit well for those in charge.  And now there may be legal battles for the next year in order to sort it all out. Hopefully the folks at DW come to their senses and play by the rules they all agreed to follow.Westword, I hope you stay on this story. It should get exciting.

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