Water rates rank high

148738389Leon Festinger’s theory of cognitive dissonance refers to “the mental stress or discomfort experienced by an individual who is confronted by new information that conflicts with existing beliefs, ideas, or values.”

Many Colorado Springs homeowners may experience such a state when their monthly Utilities bill arrives. One of them, Mike Graham, reacted by sending us a letter, excerpted in part below:

“Colorado experienced a heavy snow year over the winter and spring. Many areas had 140 to 200 percent of regular snowfall. Our rivers are running full and reservoirs are filling up. What a surprise it was to receive my water bill for mid-June to mid-July for $255.82 for water alone. The water bill would have been $124.73 without the tiered rates added. The tiers added 105% to our water bill.  

“I called customer care for Denver Water and found that Denver has four tiers of rates. … I discovered that my same usage in Denver would have cost $164.93. That is $90.89 or 35.5 percent less than Colorado Springs.

“If Colorado Springs Utilities is owned by the residents, why is it so much more expensive? Why does our City Council and Mayor allow these unfair charges?”

watercostgraphGraham is right about the charges, but whether they’re unfair is a matter for ratepayers to decide. One thing is certain, though: Colorado Springs Utilities’ charges for water are the highest of any major Front Range community, and far higher than those of Greeley, Boulder, Denver, Fort Collins and Pueblo.

Based on annual treated water consumption of 115,000 gallons, a typical Colorado Springs homeowner would pay $808 plus a daily “service charge” of 52 cents for a total of $1,098 annually, or about $91 a month. A Denver homeowner would pay $433 and an annual service charge of $80 for 115,000 gallons.

Greeley charges $571 for the same amount of consumption, Fort Collins $468, Boulder $388 and Pueblo $337. Among larger Front Range cities, only Aurora ($751) is close to Colorado Springs.

CSU isn’t shy about blowing its own horn, though. On its website, the company touts the benefits of municipal ownership: “In 1924 the residents of Colorado Springs voted to create a four-service public utility. Since then, as a municipal utility, our focus has been on the basics — providing exceptional customer service while keeping costs low. … Rates are set only high enough to cover the cost to provide service.”

Comparing our billing structure with Denver’s, it’s clear that Springs customers pay much more — once you figure out the rates. By design or not, CSU’s rate information is presented in a way that’s difficult for the layperson to understand. All of us can envision 1,000 gallons of water, but 999 cubic feet? That requires a calculator.

Here are the two rate cards:

Colorado Springs

(Tiered water rates as of Jan. 1, 2014)

Monthly use

Up to 999 CF

Inside city: $0.0349 per CF

Outside city: $0.0524 per CF

1,000 to 2,499 CF

Inside city: $0.0654 per CF

Outside city: $0.0981 per CF

2,500 CF or more

Inside city: $0.0988 per CF

Outside city: $0.1482 per CF

CF = cubic feet

One CF = 7.48 gallons

Denver

Single-Family Residential

Monthly consumption (gallons), rate per 1,000 gallons

Block 1, 0-11,000, $2.68

Block 2, 12,000-30,000, $5.36

Block 3, 31,000-40,000, $8.04

Block 4, more than 40,000, $10.72

CSU’s highest tier, at $13.20 per 1,000 gallons, kicks in after 18,700 gallons. By contrast, Denver’s highest tier, at $10.72 per 1,000 gallons, doesn’t take effect until you’ve consumed 40,000 gallons.

That might explain the “how” of Graham’s bill, but not the “why.”

Compared to its peer cities, nature dealt Colorado Springs a lousy hand. We’re not on the mainstem of any river, unlike Denver (South Platte), Pueblo (Arkansas) or Fort Collins (Poudre). In the 19th century we tapped water from local sources and the Pikes Peak watershed, but that wasn’t enough when modern-era growth began in the 1950s. The low-hanging fruit was long gone, developed by Denver and the northern Front Range communities.

For example, Eleven Mile Reservoir in Park County was constructed by the Denver Water Board in 1932. Costing $1.5 million, the reservoir has a surface area of 3,405 acres and a capacity of 92,779 acre feet. Not far away, 20,000 acre-foot Antero Reservoir was acquired by Denver in 1923.

Colorado Springs in the 1950s had no choice but to heed Horace Greeley’s famous dictum: “Go west, young man!” Water was available for development in the Colorado River basin and the Upper Arkansas — but at a cost. During the next half-century, the city built hundreds of miles of pipeline, multiple reservoirs and pumping stations, and participated in partnerships with the federal government and neighboring cities to bring water to our growing community.

Asked for comment about this story and CSU’s water rates, Utilities spokesman Dave Grossman sent this by email:

“Ever since General Palmer founded the city of Colorado Springs, water supply has been one of our community’s biggest challenges as we do not have a significant source of water nearby. Other cities along the Front Range have large rivers that bring water to them: the Platte River through Denver and the Arkansas River through Pueblo, for example.  Snowmelt from Pikes Peak and water from local creeks only supply about 20 percent of our community’s water supply.

“Therefore, Colorado Springs has had to build, operate and maintain reservoirs, pump stations and hundreds of miles of pipeline to bring water from the other side of the Continental Divide, expenses that many Front Range water providers do not have.

“By planning for and building this significant water delivery system, Colorado Springs Utilities is well positioned to provide a safe, reliable water supply to our community now and for our children and grandchildren. The Southern Delivery System will enable us to maximize our existing water rights and provide critical redundancy for our aging delivery systems. Work on the SDS is ahead of schedule and $147 million under budget. No water rate increase is proposed for 2015.”

Today’s complex water system requires constant expansion and investment to keep up with local demand, meaning consistently high debt levels. While CSU’s debt is cross-collateralized across its divisions, policy requires each unit service its own debt. Financing SDS required 12 percent water rate increases in 2011 and 2012, followed by 10 percent increases in 2013 and 2014.

As company CFO Bill Cherrier told a reporter early in the year, “We’re hoping for a wet winter, deep snowpack and full reservoirs — and a long, hot dry summer!” This summer’s abundant rainfall may reduce CSU’s irrigation water sales.

High as rates may appear to be, CSU’s original projections for SDS anticipated seven 12 percent rate increases between 2011 and 2017, followed by 4 percent increases in 2018 and 2019.

As for Mike Graham, here’s the takeaway: City Council serves as the Utility Board and sets the rates. Mayor Steve Bach is just another disgruntled customer. In fact, he’s been asking for lower rates — not on his personal bill, but for the city’s 151 parks. Thanks to the Board’s refusal to maintain a special parks rate, that water bill increased from $2.3 million in 2013 to $3.4 million this year.

You think you have problems!

4 Responses to Water rates rank high

  1. They also need to quit building out east, that’s why our forefathers did not. They also need to stop selling our water to others. They could probably find a CEO that doesn’t cost a million ether.

    Bob
    August 18, 2014 at 1:29 pm

  2. We need leaders that are not in it for the portfolios, or there contractor friends. We need someone who will work for the people and get the community back in the black, and not pissing away money on pet projects. If we were solvent we would not need to be taxed to death.

    Bob
    August 18, 2014 at 3:02 pm

  3. Colorado Springs and Aurora are participants in the Homestake pipeline. Many citizens don’t think about the fact that our water does not come from our area, it comes largely from the Western slope and has to be piped to us. Our rates are higher because we don’t get our water from a river running by our community or a well such as other smaller towns listed in this report.

    Unfortunately many readers will not get to the part that mentions how far away our water is from our community. That and the current expansion is why our rates are higher. In the long term our rates will likely normalize and go down slightly as compared to other communities in Colorado. But, taking into consideration how far our water travels through pipelines etc., we will never be the lowest. We unfortunately can’t just draw water out of a river running through Colorado Springs.

    Tim Griffith
    August 19, 2014 at 6:58 pm

  4. Tim you are right, but you do not build beyond your means. Which our elected officials have let contractors do.

    Bob
    August 20, 2014 at 4:04 pm