We’re on the verge of beginning construction of the Southern Delivery System, one of the most important water projects in Colorado and the history of our city.
The Colorado Springs City Council approved moving forward with SDS construction in order to begin delivering water in 2016. This project will provide the water we’ll need through the middle of this century and beyond. SDS will create jobs, support our economy and quality of life, and enable our city to prosper.
SDS represents a major investment in our community’s future. We recently asked City Council to approve the first two years of a phased-in rate plan to pay for it. We’re proposing 12 percent water rate increases for 2011 and 2012. The change will add about $4.42 to the typical monthly residential bill starting in January 2011 and another $4.96 to the monthly bill beginning January 2012 — increasing the overall utilities bill by less than 3 percent each year. While not part of the current rate case, similar adjustments will be needed through 2016. Despite these increases, water continues to be a great value — a gallon of water delivered to customers’ homes and businesses costs about one-half cent today and will cost 1 cent in 2016.
The phase-in program is critical to the implementation of a project the magnitude of SDS. The program levels out the increases needed over a period of time — avoiding large increases in any one year. We also recognize that business and residential customers prefer predictable rates for their own planning.
Getting water to Colorado Springs isn’t easy. We’re not as fortunate as other large Colorado cities where major rivers bring water directly to their communities.
Earlier generations provided the leadership required then to deliver the water our community uses now. We’re benefiting today from their decision to invest in our future.
The Homestake system, built in the 1960s, doubled water rates. Today, we rely on Homestake for up to 70 percent of our water. Without it, we would not be able to provide water to nearly half of our community today.
Now, it’s our turn. By investing today in SDS, we’re investing in the future of our city and ensuring that our children and grandchildren will have enough water to live in Colorado Springs and raise their families here.
But SDS isn’t just about serving future customers. It will serve as insurance for customers today.
Recently, we shut down the Homestake pipeline after a massive boulder caused a break that will require weeks to repair. The nearly 50-year-old Homestake system has experienced seven outages in the past 10 years — one lasting for six months. Thankfully, this spring we have enough water in storage and are experiencing cool, wet conditions. Under different circumstances, we could be faced with serious supply challenges. SDS will provide a critical backup for our existing system — ensuring that we have enough water when other parts of our system are down for repairs.
Our system of reservoirs, pump stations, pipes and treatment plants spans seven Colorado counties. Costs to operate, maintain and upgrade this aging system continue to rise. Approximately 22 percent of the revenue from the proposed rate changes will fund existing water infrastructure.
It’s taken 15 years to receive the approvals to begin construction on SDS. We aren’t certain we would be able to do this again if we fail to capitalize on this opportunity.
We have a limited window of opportunity to build SDS and take advantage of current lower costs on construction and financing, which could save customers millions of dollars. Planned rate adjustments also put us in a more stable position to borrow money needed for construction — similar to providing a bank with proof of income for a home mortgage.
SDS construction will employ an average of 380 workers between now and 2016, with peak employment of 700 workers in 2014.
Construction for SDS will be structured to provide opportunities for local businesses to benefit from work on the project. Recently, we announced a regional team of contractors from Colorado Springs, Pueblo and Fremont County will build the SDS connection to Pueblo Dam. This is the beginning of local communities realizing the positive economic impacts of this project.
SDS will provide the entire region with a needed economic boost in the near future and help support our community’s long-term economic viability.
Forte is the CEO of Colorado Springs Utilities.