A two-year rate freeze is now in effect for the Pagosa Area Water and Sanitation District (PAWSD). The freeze was effective as of July 17, when the motion was approved unanimously by the four directors in attendance at that evening’s board meeting. Director Burt Adams was the only director unable to attend.
Prior to making the decision to implement the rate freeze, directors heard concerns about the motion from Shellie Peterson, PAWSD business manager, during their work session directly preceding Thursday’s meeting.
Peterson stated that she found several aspects of implementing a two-year freeze troubling. Firstly, when the district conducted its rate study in 2013, it was anticipated that a reduction in the rates would create an “elasticity,” meaning customers might be inclined to use more water if it did not affect their overall bill as much.
Additionally, because 2,000 gallons of water a month are included in the price paid by all customers, PAWSD anticipated people who were using less water each month, for instance 1,500 gallons, would up their usage since they were paying for the water anyway.
“I’m just not seeing any price elasticity action going on,” Peterson told the board. “As a matter of fact, what I’m seeing, is several things (that) concern me in the month of June.”
Peterson said that compared to June of last year, the district has sold $56,826 dollars less water. Year-to-date, the district is $29,000 short of revenue compared to 2013. To top it all off, the business manager stated that in 2013, the district was already $47,000 short of hitting its revenue projection, making hitting this year’s projection even tighter.
Purely looking at demand, the district has also treated 84 acre-feet less water January through June this year than in the same time frame last year. Peterson recognized there are weather variables between the two years, such as rainfall, but said overall, she is concerned.
“I think that with such a volatile water environment and a new rate structure that is not behaving the way it was anticipated when the decisions were made about the rate study, I think it’s very problematic to promise the customers that you’re not going to do something for two years, when the volatility here is so unknown,” she said.
“I think, at a very minimum, you should wait through the summer season and see how this thing (the rate structure) is going to normalize — if it is,” Peterson advised, adding that if it does normalize, directors first need to look at the budget to determine how they will deliver on a two-year promise, before passing a motion.
Director Glenn Walsh complied and distributed a spreadsheet of regional rate comparisons, comparing PAWSD’s prices to districts in Durango, Bayfield, Cortez, Farmington, Telluride and elsewhere. PAWSD was above average in all comparisons shown on the sheet.
“If you look at our tiered rates,” Walsh began, “and I don’t expect to see any price elasticity, the average tier-two rate, in this corner of the state, is two (dollars) sixty-five (cents). We’re (almost) three hundred and fifty percent higher than that (at $8.43). You’re not going to see any price elasticity when your prices are three hundred … percent higher than the competition.”
Walsh recognized that many districts have not improved their infrastructure the way PAWSD has, which is one reason rates are higher; and he expects neighboring districts’ rates will go up as internal improvements are made. However, Walsh agreed that moderating and sustaining rates for two years needs to be a target for PAWSD.
Director Paul Hansen stated that, not only would he like to implement a rate freeze, but he wants to see prices come down.
“People that I’ve talked to are just angry about their water bills,” Hansen stated, outlining that he would like people to plant more trees and green up their yards, thereby using more water, while the district works to bring prices down.
Walsh agreed that he would like to see prices come down as well, but that directors must first go through the budget to find out where to reduce spending.
“If you can find it, then you can lower the rates,” he stated.
Board Treasurer Gordon McIver gave the opinion that the directors should plan for the two-year freeze and work to find the money, a sentiment ]\chairman Mike Church agreed with.
“I’m willing to go into the budget process to find (the money) — to aggressively find it,” Church stated.
When it came time to vote on the measure during the regular meeting, directors came to the consensus that if they implemented the two-year freeze, they would be forcing themselves to make budget cuts. And that is exactly what they agreed to do.
The board also moved to amend its bylaws to reinstate TABOR (Taxpayer Bill of Rights) protections immediately. The issue regarding TABOR will be put on either the November 2014 ballot, in coordination with Archuleta County, or on the next PAWSD election ballot in 2016 — whichever is cheaper.
Because it is not a pressing issue, the board elected to conduct business as though the protections are already reinstated, until an election makes it official.