Utilities' 2011 budget includes possible rate hikes
Anticipating another year of weak economic growth, Colorado Springs Utilities is projecting sales to be relatively flat in 2011 under its $1 billion budget.
At the same time, the city-owned utility has several big construction projects in the works, triggering proposed rate increases in electric and natural gas. Utilities also has begun work on the 62-mile Southern Delivery System water pipeline, which will mean a 12 percent water rate hike in 2011 that was approved in 2010.
Exactly how much more money customers will pay in their monthly utility bills is unknown because, in short, there are several moving parts, including the possible purchase of a gas-fired power plant, which could reduce electric rates.
Utilities’ proposed 2011 budget, which is $91.2 million less than this year’s budget, will be presented to the Utilities Board on Wednesday. The 1 p.m. meeting is on the fifth floor of the south tower of the Plaza of the Rockies, 121 S. Tejon St. and is open to the public.
A public hearing on Utilities’ 2011 spending plan — and its proposed rate case for electric and natural gas rate increases — is scheduled for Nov. 23 at City Hall, 107 N. Nevada Ave.
“We are seeing very, very small growth in sales, so we are doing everything we can as a utility to manage (operation and maintenance expenses), which have remained flat for at least the last four years with all the price increases we’ve seen on the marketplace,” Bill Cherrier, Utilities’ chief planning and finance officer, said Friday.
“We’ve been able to manage our capital to minimize the rate increases that we have, (but) even with doing all that, we still have rate increases that are being proposed,” he said.
Even if the council approves rate increases, the typical residential Utilities bill would go down for the first three months of 2011. That’s because Utilities is refunding money it over-collected for gas under a so-called gas cost adjustment, which Utilities uses to compensate for increases and decreases in market prices for natural gas and electricity. The refund went into effect Nov. 1.
Mayor Lionel Rivera, who chairs the Utilities Board, said city officials wanted the four-service utility to refund money to customers right away.
“Instead of phasing it in over nine months or a year, they phased it in over six months to give everyone a rebate quicker and during the winter months where it has a much better impact,” he said.
The refunding will be complete by March, “resulting in an effective increase of $8.99 (a month) or 4.9 percent to the typical residential bill,” according to the proposed budget.
But that number is likely to change because Utilities wants to purchase the stake in the Front Range Power Plant that it doesn’t already own. Utilities currently has 50 percent ownership in the power plant, which is about 17 miles south of Colorado Springs off Interstate 25. Purchasing the rest of the plant could lead to a decrease in electric rates because of the way in which the purchase would be financed.
The Utilities Board, acting as the City Council, will discuss the purchase on Wednesday.
Utilities is awaiting a third appraisal. If the council approves the purchase, Utilities would issue up to $300 million in bonds, Cherrier said.
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