City Council approves utilities' rate hikes

Colorado Springs City Council on Tuesday approved rate hikes in water, electric and wastewater service.

City-owned Colorado Springs Utilities is increasing rates for residents 41 percent for water, 8.7 percent for electricity and 14.3 percent for wastewater.

The new rates take effect Sunday. Utilities says the average monthly residential bill will increase $18.24

The electric and wastewater increases passed on 6-2 votes, but approval for the water increase came after the council initially deadlocked 4-4, with one member absent.

Councilman Tom Gallagher arrived, the members took a recess and left the room, and three came back in and changed their votes.

Council members Jerry Heimlicher, Scott Hente and Larry Small changed their votes, and the water hike passed 7-2.

Gallagher and Darryl Glenn voted against it.

"I'm looking at the state of our customers, the ability to pay," Glenn said. "Consumer confidence is what's slowing down the economy. The best thing we can do is give people a little bit of a break."

The city-owned utility says the increase is needed because the housing slowdown has reduced the fees it collects to hook up new houses, which long subsidized the water system.

Officials also cite the need to build projects, including the proposed $1.1 billion Southern Delivery System pipeline, and work needed on the electrical system.

The council members who changed their votes said they did so because Utilities officials, after the recess, clarified how the agency's bond rating would be affected by a vote against a proposed increase, that a drop in its rating could mean millions of dollars more to borrow money. Bonds are an important financing tool for Utilities, which expects to issue bonds to help pay for future projects.

"The rating agencies are very sensitive to what appears to be any instability," Small said.

"I don't want to pay 41 percent higher water rates, but in the long term we'd pay a lot more if it messed up our bond rating and caused us to pay additional collateral in the tens of millions of dollars," Hente said.

Under the new rate structure, businesses can expect water rate hikes of 43.8 percent for commercial and 42.9 percent for industrial users, and wastewater hikes of 17.3 percent for commercial and 13.5 percent for industrial users. Electric rates will remain flat or decrease slightly.