Springs Utilities proposes 2.3 percent rate hike next year

Colorado Springs Utilities on Wednesday presented a $1.1 billion 2010 budget to City Council. Included is a 2.3 percent hike to residential bills.

The budget is $12.3 million less than in 2009. Officials say the rate increase is needed to pay for projects, including the $1.4 billion Southern Delivery System water pipeline and to comply with tightening coal emission regulations.

The city-owned utility is not proposing layoffs, at a time when the general city government is facing massive cuts due to declining sales tax revenue. Utilities officials said the 200 positions that have been eliminated in the past three years have trimmed the organization as much as possible.

“City services are being reduced and the bulk of city costs are labor costs,” said Bill Cherrier, Utilities chief planning and finance officer. The city council has mandated 10 unpaid furlough days for civilian city employees in 2010, amounting to a 3.8 percent pay cut.

But he said labor accounts for just 16 percent of Utilities’ costs. Utilities has 1,856 employees.

“Our services are not decreasing. Our service requests and customer needs are continuing to increase,” Cherrier said.

Employees won’t receive raises in 2010 under the proposed budget, though they will see a portion of last year’s pay-for-performance money returned to them. The program, which awarded employees a portion of their salary as a bonus, was ended last year. Under the program, which began in 1997, Utilities employees’ base pay was lowered, and employees were paid based on individual evaluations, tied to performance plans set in advance. The average payout in the last year of the program was $5,318.

Utilities spokesman Dave Grossman said 85 percent of last year’s bonus money will remain in 2010, to be awarded as merit pay and other incentives, which amounts to a 1.2 percent decrease in pay for employees.

Utilities’ overall labor budget for 2010 is $176.7 million, down from $177.2 million in 2009.

CEO Jerry Forte said Utilities’ number of customers per employee has increased from 309 in 2005 to 361 in 2010.

“We have more work to do, with more complexities and fewer people to do the work,” Forte said.

Along with spending $46 million on initial construction for the Southern Delivery System, Utilities plans to spend $16 million to bring the Martin Drake Power Plant into compliance with tightening coal emission regulations and $7.6 million for upgrades to the Las Vegas Wastewater Treatment Plant.

The cost of fuel, which is the largest piece of the Utilities budget, 35 percent, is dropping by $53 million, mostly due to declining natural gas prices. Officials say the cost to buy and transport coal, which is used to generate 70 percent of the city’s power, is increasing.

Utilities proposes to increase average residential bills by 4.5 percent for electric service, 1.15 percent for water and 1.12 percent for wastewater. Utilities also plans to drop natural gas rates by 4.45 percent, as the council required when it approved a rate hike in June. The average monthly bill would increase 2.32 percent, or $4.18, to $184.39, if the council approves the change.

The rate increases will be the subject of a public hearing Nov. 24 at the City Council meeting. The council is expected to make a final vote on the 2010 budget Dec. 8.