Meanwhile, Northern is looking at big rate increases to coverage operations. Here’s a report from Steve Lynn writing for the Northern Colorado Business Report. Here’s an excerpt:
Under current projections, rates for Colorado-Big Thompson Project water could rise from $28 to more than $100 per unit for municipal users and from $10 to $80 per unit for agricultural users by 2023, according to documents from the Northern Colorado Water Conservancy District…
The extra money is needed because Northern Water’s expenses have outpaced its revenue in three of the last four years. Property taxes, which have remained flat since the recession, make up more than half of Northern Water’s revenue, while water-rate revenue accounts for about 20 percent of its funding.
The agency has coped, up until now, by drawing from cash reserves to fund its operations. Reserve funds are partly intended to help stabilize revenue but are not a sustainable funding approach in the long term, according to Northern Water.
The agency’s board is expected to decide on short-term rate hikes through 2018 this month. These potential hikes to $52.70 for municipal users and $32.20 for irrigation users would represent the largest dollar increase in Northern Water’s history, although the district has seen similar, double-digit percentage increases in the past.
“In the early 1980s, there were several years with double-digit increases, similar to what we are looking at now,” Northern Water spokesman Brian Werner said.
The rate hikes are essential to maintain infrastructure, according to Northern Water, and experts believe they will lead to additional water conservation. But the higher prices will put pressure on farmers…
Northern’s customers receive water under two types of contracts: fixed and open rate. The new rate hikes apply to those customers who buy open-rate water. In June, Northern Water board members raised the open-rate assessment 9 percent for next year. The 2015 rate for cities will increase to $30.50 per unit while the agricultural rate will rise to $10.90 per unit. Fixed-rate assessments based on decades-old contracts will remain $1.50 per acre foot.
Roughly two-thirds of Northern’s water is delivered via open-rate contracts, while one-third is governed by fixed-rate agreements…
Northern Water isn’t the only water district that has had to raise water rates. The Greeley-based Central Colorado Water Conservancy District, which supplies water to areas of Weld, Adams and Morgan counties, also has passed rate-assessment increases in recent years and plans to meet this month to consider additional rate hikes.
“Our organization is looking at future (operations and maintenance costs) and how do we keep our finances up,” Central Water Executive Director Randy Ray said. “You’ve got regular operations costs like labor, electricity and gasoline for vehicles. Then you also have deferred maintenance.”
The rate increases come as the nation faces challenges from deteriorating water infrastructure, which will cost more than $1 trillion over the next 25 years to fix in order to maintain current water service levels, according to a report from the American Society of Civil Engineers. Customers will pick up the tab mostly through higher water bills.
Similarly, users of Colorado-Big Thompson Project water will pay higher water bills as a result of the increased rate assessments. Increased revenue from the assessments will help fund Northern Water’s operations and maintenance budget, which accounts for almost half of the water district’s expenses. Northern Water says it needs to make major upgrades to water delivery infrastructure, much of which was built more than 60 years ago.
Tom Cech, director of One World One Water Center at Metropolitan State University of Denver, said higher expenses and a rising population have pressured water supplies, leading to elevated costs. He noted, however, that investments in water infrastructure are critical to maintaining water delivery systems.
“Look at all the investments that water providers did 100 years ago in our water system: new reservoirs, delivery systems and so forth,” he said. “That’s just the process of keeping up with the costs and population growth.”
The Northern Board did pass an increase. Here’s a report from Steve Lynn writing for the Norther Colorado Business Report. Here’s an excerpt:
The board of directors for Colorado’s largest water wholesaler Friday passed a historic water-rate hike in terms of dollars, representing a 202 percent increase for agricultural users and 90 percent for municipal users from 2014 through 2018.
Customers of the Northern Colorado Water Conservancy District receive water units under two types of contracts: open rate and fixed. By 2018, the open-rate assessment for a unit of water from the Colorado-Big Thompson Project will cost $30.20 for agricultural users, up from $10 this year, and $53.10, up from $28, for municipal users.
Fixed-rate assessments based on decades-old contracts will remain $1.50 per acre foot.
Board members unanimously approved a steep rate hike for the open-rate assessments, though Colorado-Big Thompson Project water users had requested a smoother transition of increases over time. The rate hike through 2018 represented the largest dollar increase in the public water district’s 77-year history, though the water district’s board members has passed similar percentage increases in the past.
The steeper rate hikes will help Northern Water more quickly achieve a balanced budget, said Jerry Gibbens, project manager and water resources engineer for Northern Water. The water district’s expenses have outpaced its revenue in three of the last four years, but Northern Water expects to reach a balanced budget by fiscal 2017 through the rate hikes.
Based on decades-old contracts, the fixed-rate assessments remained the same, a point of contention among some water users who pay the higher open-rate assessments and contend that Northern Water should raise the fixed-rate assessments.
Northern Water’s board agreed to look into how it could adjust the fixed rates in the future, but the agency has indicated that it may not be able to do so because they are set “contractually in-perpetuity.”
In June, the board decided to raise 2015 open-rate assessments to $30.50 per unit while the agricultural rate will rise to $10.90 per unit.
Under current projections, rates for Colorado-Big Thompson Project water could increase to more than $100 per unit for municipal users and to $80 per unit for agricultural users by 2023, according to Northern Water documents.
Board members did not decide on increases after 2018, but they plan to set rates annually as well as make projections of rate adjustments two fiscal years in advance.
More Northern Colorado Water Conservancy District coverage here.