Springs Utilities proposes 2.32 percent rate hike for 2010

Electric rates would go up, natural gas rates would decrease and water and wastewater rates would increase slightly under Colorado Springs Utilities’ 2010 rate filing, submitted to city council Tuesday.

The city-owned utility is asking 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, reducing bills by 4.45 percent, as was required by the council 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.

And, for the first time Utilities officials are aware of, the utility will ask for approval of a multi-year schedule of water rate hikes, 12 percent a year from 2011 through 2017, to pay for the $1.4 billion Southern Delivery System water pipeline, which would double water rates in Colorado Springs. Construction is expected to begin in 2010.

Officials said the future water rate hikes would kick in automatically unless city council takes action to stop them. Officials said having the financing plan in place will help Utilities’ bond rating, as it secures loans to pay for the project.

“Yes, this is a significant financial commitment but it’s really what our community’s got to have to protect its future,” said chief water services officer Bruce McCormick. “We’re doing everything we can to try to balance these rate increases over time.”

McCormick said Utilities also plans work on several of its mountain reservoirs and upgrades to wastewater treatment facilities in 2010.

The proposed electric increase reflects the need to fit the downtown Martin Drake Power Plant with scrubbers to meet new environmental regulations, at a cost of $160 million, and to replace some of the 2,300 miles of underground cables in the system, as well as rising coal and transportation costs, said Tom Black, chief energy services officer.

Black said the natural gas rate drop reflects a nationwide lull in prices. Utilities buys natural gas on a hedging program, with prices based on a three-year average.

For businesses, Utilities proposes increases of 4 percent for electric, 1.09 percent for water and and .26 percent for wastewater. Gas bills would drop 10 percent.

For industrial users, bills would go up 6.53 percent for electric, .48 percent for water and .06 percent for wastewater. Gas would drop 4.5 percent.

A public hearing on the rate filing will be held Nov. 24. Utilities officials expect a council vote Dec. 8, and the new rates, if approved, would take effect Jan. 1.

Overall, the 2010 increases are much smaller than this year’s 11.9 percent hike.  In February, Utilities raised residential water rates 41 percent, electric rates 8.7 percent and wastewater rates 14.3 percent, largely because of wildly fluctuating energy prices and the housing slowdown, which drastically reduced the amount it collects to hook up new houses to the water system.