Durango water rates have been the subject of much change in the past few years – thanks, in part, to the city’s most expensive project in history. The fluctuations may not stop as City Council plans to address this week what city staff say is an urgent need for upgraded infrastructure and a redundant water supply.
The city paid a North Carolina-based consulting group Raftelis at least $37,500 in the first quarter of 2019 to conduct a water rate study analyzing how the city can best adjust water rates to meet the demands of a growing population, aging infrastructure and a changing climate, city documents show.
The last water rate study in 2014, was completed just after the city proposed a $57.4 million renovation of the Santa Rita Water Reclamation facility. The project, Durango’s most costly ever, is slated for completion in late September.
Construction costs are soaring, the city’s 146 miles of water distribution mains are aging and the likelihood of drought is increasing, City Operations Director Levi Lloyd told the Durango Utility Commission at a regular meeting July 1.
“Changing behavior now is the important part, now when we’re in the midst of a drought. Just being honest, we live on the edge of a desert. Drought is expected to be more severe,” Lloyd told commissioners. “If we go forward with thoughts that we have all the water, what happens when we have a significant drought and we ask people to make wholesale changes?”
Utility commissioners could not be reached Saturday for comment.
But the biggest risk they collectively acknowledged at the July 1 meeting is running out of water, according to minutes and a recording of the discussion of an update on the water-rate study.
Although water usage is down over the past 50 years to average demand from 4.49 million to 3.29 million gallons daily, projected population from about 19,000 to about 40,000 by 2055 puts average daily demand at 7.62 million gallons, consultants found.
The approximate daily demand in 2030, according to Raftelis projections, is about 4.41 million gallons.
City staff members have provided city councilors with a report identifying three alternatives to the city’s water rate structure, each of which raise the cost of low-water users disproportionate to high-water users.
All users now pay a $16.23 base charge and are split into four monthly water use tiers for residences: zero to 4,000 gallons, 4,000 to 10,000 gallons, 10,000 to 18,000 gallons and 18,000 gallons or more. The more water used, the higher the cost. The lowest tier cost per 1,000 gallons is $3.16 plus a flat $28.87. The highest tier cost per 1,000 gallons is $11.75 plus a flat $263.99.
Consultants suggest three different rate structures for City Council to consider.
Two scenarios suggest a “cost of service model,” which decreases the base charge to $5.23 for all users. But, in doing that, consultants suggest increasing the rate for people in the lowest water-use tier from $4.46 to $6.78 per 1,000 gallons and decreasing the rate for users in the highest water-use tier from either $16.59 (including summer rates) or $15.90 per 1,000 gallons to $9.57.
The third scenario proposes an increase to the cost of service charge designed to recover at least 25% of operation costs, bringing the base charge for all water users to $15.20, less than the current base charge. But, again, consultants suggest increasing the rate for people in the lowest water-use tier from $3.66 to $5.29 per 1,000 gallons and decreasing the rate for users in the highest water-use tier from $12.40 per 1,000 gallons to $7.46.
Consultants further suggest six scenarios to build a water treatment plant at Ridges Basin – a proposed 14-million-gallon-a-day plant designed to add capacity to the city’s 12-million-gallon-a-day plant at College Mesa – within the current rate structure. Consultants explore what it might cost to start building a full water treatment plant or a partial water treatment plant starting in 2020, 2022 or 2025.
Five of the six scenarios suggest increasing water rates by either 2% or 3% each year from 2020 to 2025 within the current rate structure to pay for a plant to treat water from Lake Nighthorse. The only scenario that Raftelis projects would not require an increase is starting construction on a partial plant in 2025.
These proposed changes come in the wake of steadily increasing water rates in the past 20 years.
From 1997 to 2013, the cost of the first 2,000 gallons of water used by single-family homeowners increased from $5.82 to $13.08, an increase of more than 124%, city ordinances show. And the rate for every 1,000 gallons over the base fee rose from $1.24 to $2.23 between 1997 and 2013, an increase of almost 80%.
Both of those rates are significantly higher than the 45% rate of inflation that occurred during the same time period, according to the Bureau of Labor Statistics. If water rates would have kept pace with inflation, residents would have been paying $8.44 by 2013 for the first 2,000 gallons of water – $4.64 less than what was being collected.
Durango City Council is scheduled to hear a presentation about the water rate study from Raftelis consultants about their preliminary findings and data in an effort to elicit feedback from city councilors for a final rate study proposal.