14 October 2010

Water Bills To Rise

Denver Water warned Wednesday that customer rates may rise by an average of 31.2 percent over the next three years. . . .

During a meeting with the Denver City Council . . . council members . . . said their constituents will struggle to afford the higher rate. They predicted brown lawns would proliferate throughout the city as customers pared back on using water.

"The neighborhoods are going downhill because of the nature of this," Councilwoman Jeanne Faatz said. "You are having spotty areas. People cannot afford what you are asking of them." Faatz said now might be the time for the public to push for Denver Water to be run by an elected board. The utility, which has 1.3 million customers, currently is run by a five-member board appointed by the mayor of Denver. Faatz said a constituent recently complained about a $400 monthly water bill. . . .

Jim Lochhead, chief executive of Denver Water, said the 2011 increase would raise the water bill for the average residential user in Denver by about $41 for the year and $32 annually for the typical suburban resident. . . [T]he increase will take a greater toll on government agencies, industrial firms or those with large lawns that are heavy water users.

"This is what we need to do to for the continued sustainability and reliability of the system," Lochhead said. He stressed that the rate increase doesn't just pay operating costs but also will go toward debt service for maintenance and upgrades.. . . [T]he proposed 2011 rate hike of 10.4 percent, which will be voted on by the utility's board Nov. 17. The utility cut spending by $10.5 million from original projections for 2011 and now projects operating costs next year of $198.8 million, debt service costs of $41.9 million, inflationary costs of $2.57 million and capital expenses of $99 million.

From here.

Personally, I have very little sympathy for the position that Councilwoman Faatz is taking.

Denver Water is a city owned utility. Denver residents are getting their water at cost. Denver Water aggressively fights to make us a top dog in the effort to gain our share of the state's scarce water supply, and they are so good at their job that it can sell excess water to suburbanites at a rates higher than what Denver resident pay. If Denver Water does make a profit due to prudent management, that just reduces our rates the next year.

Denver Water has worked hard to keep long term costs down, for example, by automating the water meter reading process and fixing leaks in the system, and the quality of our drinking water is better than almost any other city of our size in the nation.

An elected board would certainly do nothing to make Denver Water more efficient. There is no sustainable way to charge less than the actual cost of providing a service.

Indeed, it would make it less accountable, because the Mayor is in a better position to determine whether candidates are qualified and has a political interest in a Board that does its job well, while voters are in a poor position to evaluate competence. And, on the Denver Water board the questions aren't partisan or political. It need to keep prices low, keep water flowing, and keep water quality high. Republicans, Democrats and unaffiliated voters alike agree on those goals, although Libertarians may have an allergic reaction to the notion that a public agency can actually do a job as well or better than the private sector would.

The hard reality is that the water supply in Colorado is going to shink over time as global warming makes an already arid state more dry. Thirty years from now, on average, the snowpacks will be smaller, and the rain will fall less. We need to give people appropriate incentives to conserve.

Honestly, the problem is as much that water is too cheap, given its scarcity. There isn't enough of an incentive to conserve, although Denver Water's recent move to monthly billing, to allow customers to keep better track of their water useage, and to basing a larger share of water bills on how much you use, rather than simply being a customer, are good choices.

Government agencies, golf courses, industrial users and people with large lawns should be getting squeezed to find ways to use less water. The vision of Denver neighborhoods full of houses with lush blue grass lawns is not a sustainable future for our city. We live in the arid West, not Soctland or Georgia or Seattle, and we need to live accordingly.

If Councilwoman Faatz has a constituent who is getting a $400 a month water bill that isn't simply a billing mistake (and if it is I billing mistake, a wholeheartedly join her in her concern), then that constituent needs to shape up and use less water, or suck up and realize that flagrant excess has its price.

Every increase in prices is a little economic squeeze, admittedly. But, an increase of $3.42 a month for an average Denver household, some of which can be mitigated with reduced water useage for those who are thrifty, is not going to be the straw that breaks the camel's back even during a recession.

There is a price squeeze going on in this state. College tuition has tripled in about a decade. Health insurance premiums have consistently grown at double digit rates. Prescription drug prices have soared. People have added new expenses like cell phone bills, increased monthly television charges and broadband service to their budgets that haven't been offset by declines in the cost of some of the particular services offered. The baseline price of gasoline has gotten a lot higher than it used to be. Housing hasn't become a lot more affordable in Colorado to the extent that it has in other states. We have had periodic spikes in natural gas prices that have forced families to make much harder choices between eating and staying warm in their own homes.

But, in Denver, our water bills have remained, by comparison, very reasonable. This is not the right fight to be waging.


Michael Malak said...

It's not just global warming that will tighten the water supply, but also well owners (private and farms) when their wells run dry due to deep aquifers being overtapped (which require centuries or millenia to replenish) or become poisoned due to fraccing and other fossil fuel extraction techniques.

Also, speaking of conservation, you didn't mention the efforts over the past decade at Washington Park: sprinkling with treated sewage (including flowing Smith's Ditch with treated sewage) and turning Lake Grasmere into a swimming pool with a multi-acre vinyl liner (and stone trim around the edge).

And so what if brown lawns turn more of them into xeriscaping -- that's more green. It is better to incorporate negative externalities into pricing than to come up with arbitrary government fiats such as "everyone must xeriscape".

No one's going to go thirsty. Denver Water is already progressive in its pricing, with the first few thousand gallons priced dirt cheap.

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Andrew Oh-Willeke said...

Dirt is actually more expensive than water in Denver, as I learned having bought both. ;)

Groundwater depletion is huge in places like Douglas County, and contamination is a big problem in some North Central and Western Slope communities in Colorado. But, Denver's water comes almost entirely from rivers and lakes, and aside from one decommissioned uranium mine that threatens to spill into our water supply which the owners steadfastly refuse to address, poisoned water sources aren't much of a concern for Denver either. The South Platte's source is South and East of areas where there is much mineral extraction activity going on right now.

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