Utilities wants 18.6 percent increase in water rates

Colorado Springs Utilities wants to raise the average residential water bill by $4.59 per month to make up for revenue shortfalls from lower water usage and officials' faulty growth forecasts.

If approved, the 18.6 percent increase would be the largest since at least 2000.

The City Council on Tuesday set a public hearing for Aug. 12 to act on the proposal, but Mayor Lionel Rivera later said the council's support isn't guaranteed.

He's concerned that the proposal, filed Tuesday, fails to deal with the problem that accounts for 76 percent of the $26.3 million shortfall - a drastic decline in new-home hookups caused by the slowing economy.

For years, the city's continual growth has allowed new-customer charges to subsidize water usage rates.

"We need to address a more stable revenue flow for the water department rather than rely on growth," Rivera said.

Utilities chief planning and financial officer, Ed Easterlin, said the city's rate structure is determined by the Utilities Board, which is composed of council members.

But after learning in May of the revenue shortfall, several council members expressed concern that the city hadn't reduced its dependence on development charges.

If a shift occurs, usage rates would have to climb even more than the proposed hike.

The estimated increase, based on a customer using 1,100 cubic feet of water a month, is due in part to Utilities' miscalculation in mid-2007 in forecasting the number of new hookups in 2008.

Officials have said their budget procedures prevented a more current forecast before the council approved Utilities' nearly $1 billion budget in December.

Since then, water sales have fallen, causing Utilities officials to identify $53.3 million in possible cuts to offset the water revenue declines as well as other revenue drains, including an energy rebate to customers and a decline in wastewater development charges.

The cuts include deferred maintenance, vehicle purchases, employee training and education, community sponsorships, conservation programs and several major construction projects, and leaving vacant three-quarters of unfilled jobs.

The cuts would account for about $11.3 million in the water budget.

The rate hike would make up the other $15 million of the shortfall.

Easterlin said the increase would make Utilities' rates higher than Fort Collins' but still the fourth-cheapest on the Front Range.