The Pagosa Area Water and Sanitation District (PAWSD) board of directors held a public hearing Tuesday, Nov. 12, concerning proposed revisions to the 2014 rate structure. The board intended the public hearing to be a consideration of the rate study it accepted at its regular meeting on Oct. 8 and of proposed changes to the current rate structure.
Proposed rate structure changes are based on a rate study conducted by MWH global, an international firm that provides specialized consulting, engineering, and construction services related to water and wastewater. The study can be found on the PAWSD website at www.pawsd.org, on the home page.
The MWH study revealed that, in order to meet ongoing bond obligations, on top of normal operating expenses, PAWSD would need a 4.4 percent increase in revenues from throughout the district. As such, the study suggested creating a new rate structure to increase revenues in accordance with this need.
Currently, the base monthly charge for water service is $14.50. Additional volume charges for usage above 2,000 gallons a month are $4.50 per month per 1,000 gallons for usage between 2,001 and 8,000 gallons, $9 per month per 1,000 gallons for usage between 8,001 and 20,000 gallons, and $11.30 per month per 1,000 gallons for usage over 20,001 gallons.
Proposed changes in the rate structure would most dramatically impact the minimum monthly service charge, raising it from $14.50 to $23.50, a 62-percent increase. The minimum monthly service charge allows for up to 2,000 gallons of usage. Additional volume use rates will be decreased, from $4.50 to $4.22, from $9 to $8.43, and from $11.30 to $10.59 respectively. These rate changes would allow the district to collect a larger portion of revenues from minimum monthly service charges.
A substantial percentage of district operating expenses, including water treatment and distribution, are fixed cost, while water demand and delivery is not consistent throughout the year due to seasonality of residency and visitation to the Pagosa area. The goal of increasing the minimum monthly service charge and decreasing additional volume rates is to more fairly distribute fixed costs amongst year-round and seasonal PAWSD customers, while providing a more reliable, fixed revenue stream to the district.
Water distribution and wastewater treatment services are two different business enterprises operated by PAWSD. The water and wastewater enterprise funds operate independently from each other, but are both subsidized by the PAWSD general fund, a governmental fund. Expenses associated with water collection and treatment infrastructure have recently increased, so the rising cost to distribute water is largely driving rate changes. Since the last rate increase in 2011, water distribution costs have increased while rates have remained steady, resulting in a smaller profit margin for PAWSD.
In 2011, PAWSD determined that, given operating costs, the wastewater revenue fund would not remain self-sustaining over time. As a result of this conclusion, wastewater rates increased. The anticipated 2014 water service rate increase has been scheduled and projected since 2011 as the district recognized it would struggle to both cover fixed operating and service costs associated with providing quality water service and meeting ongoing bond obligations. An ongoing part of these costs is maintenance and repair of a complex and difficult distribution system. Director Burt Adams also noted that the district is having to spend approximately $500,000 a year on Dry Gulch property debt service.
“A significant portion of water bills now is the Dry Gulch disaster,” said Adams. The cost of the biosolids greenhouse was not mentioned in this discussion.
All board members agreed that the board needs to remain fiscally responsible on behalf of taxpayers. During the public hearing, a number of community members voiced concerns about increasing rates. Complaints and concerns heard and considered at the meeting included those about increasing water costs, frustration about how the new rate structure fails to reward frugal customers for conservation, a complaint from a developer about having to pay for metered lots without structures on them, and frustration about the price of wastewater services compared to water services.
New water service rates will not be officially accepted until the board approves the 2014 budget in early December. A copy of the draft budget is available on the home page of the PAWSD website. If accepted, new rates will become effective Jan 1, 2014. Water service rates last changed in 2011. There are no proposed changes to wastewater service charges for 2014.