Area residents will face higher Utilities bills
Would increase typical bill about 18 percent
Not only do Colorado Springs' residents face an 18.6 percent bump in water rates in September, but Colorado Springs Utilities also proposes to increase the typical residential utility bill by another 18 percent on April 1.
Increases are proposed for all four services: electric, gas, water and wastewater, according to a preliminary budget forecast outlined Wednesday for the City Council, acting as the Utilities Board.
The increases would raise a typical $159 monthly residential bill to $187.
In a five-year forecast Utilities CEO Jerry Forte termed "very preliminary," officials also predicted the typical residential bill would go up about 27 percent between 2009 and 2013, a commercial bill, 24 percent and an industrial bill, 28 percent.
Vice Mayor Larry Small cautioned about being too optimistic, a problem that led to the latest water increase proposal after Utilities failed to foresee the extent of the troubled market for new homes.
For this year's budget, Utilities predicted the city would collect development charges for 2,100 new housing starts, but construction has fallen considerably behind that estimate.
That, coupled with a decline in water usage, led to a $44.6 million deficit that will be offset by spending cuts and the September water rate hike.
"I'm concerned we're going to be optimistic again," Small said after seeing the 2009 forecast. "The curve is actually going to be much lower than that."
He was referring to Utilities' prediction for 1,750 new housing starts this year and a like number in 2009. Small said the Pikes Peak Regional Building board, on which he serves, projects 1,600 home starts this year for the entire county.
Regional building officials now see that target as too high, he said, and that 2009 will bring even fewer.
"Let's be cautious," Small said.
Ed Easterlin, Utilities chief planning and finance officer, said officials are analyzing economic factors monthly and want to be conservative. Forecasters modified previous growth estimates downward, he said, and eliminated growth at Fort Carson from the 2009 outlook.
Mayor Lionel Rivera said that might be a mistake, because the latest word is the 4th Infantry Division will begin arriving in late spring.
The driving force behind the 2009 rate hike is the cost of fuel, which comprises more than a third of Utilities' nearly $1 billion annual budget.
Demand for coal by India, China and Russia are forcing costs up at a time when the city's long-term coal contracts will be expiring. One contract ends in late 2009, and another expires in 2014.
Also, natural gas prices have taken a sharp turn upward as pipelines are built to transport gas to new markets.
Forte said the agency faces "a very bumpy road ahead," rutted with regulatory pressure on coal plants, a sagging economy and "huge infrastructure needs," including the city's $1 billion Southern Delivery System pipeline from Pueblo Reservoir.
But Forte said Utilities provides reliable service at competitive rates and is among the highest-rated utility companies in the nation, resulting in a savings of up to $30 million annually in borrowing costs.
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