Board green lights sewer rate hike

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Crumbling infrastructure: Residents and businesses could see sharp increases over the next five years

By Arin McKenna

The Los Alamos Board of Public Utilities voted unanimously to endorse a plan for increasing sewer rates at a meeting last week.

The increase is necessary to cover the costs of repairing and replacing the 50- to 60-year-old infrastructure, including the future replacement of the White Rock Wastewater Treatment facility.

In a statement released prior to the board meeting, Department of Public Utilities Manager John Arrowsmith said, “Los Alamos is fortunate in that our electric, gas, and water rates are much lower than other communities. However, because of Los Alamos’ extremely varied topography, the infrastructure required to provide sewer services to this small community is more expensive.

“For instance, most communities with less than 20,000 citizens do not need to maintain and operate two wastewater treatment facilities, but this is a necessity for our gravity-fed collection system. Restructuring the sewer rate to a flat fee for our residential customers, more fairly allocates the costs across the board.”

The proposed ordinance simplifies residential customers’ bills to a flat fee every month, removing the variable rate based on the amount of potable water consumed during winter months. The proposed flat rate starts at $25.31 per month plus a $7 customer charge, for a total charge of $32.31 initially, for individually metered residential customers.

Both charges would increase eight percent a year for the next four years beginning in June 2013. Homeowners that consume a winter average of 4,000 gallons of potable water per month would see a slight decrease in their sewer bill for the first year.  

Residential customers that are not individually metered (such as some apartment complexes) would pay a flat fee of $21.09 per dwelling, plus the $7 customer charge under the proposed ordinance. Currently, apartment complexes pay anywhere from $17 to $24 per dwelling, depending on the winter average of potable water consumed. Most of these customers will see an increase of 15 to 20 percent, but a few will actually see a decrease at the outset of the rate’s implementation.  

Commercial customers will continue to be charged a variable rate, but under the proposed ordinance these customers will pay the $7 customer fee in lieu of the previous fixed rate. The commercial variable rate will increase from $5.89 to $11.91 and will be based on the winter average of potable water consumed with a minimum 2,000 gallons or other measuring period as determined appropriate by the DPU based on seasonal or other non-traditional water use patterns.  
Under the proposed rate structure, a commercial customer with a winter average consumption of 100,000 gallons of potable water would see its sewer bill go from $744.88 to $1,198.00 in the first year.

Commercial customers’ rates will also rise by eight percent a year through 2016.

The current plan was developed to address concerns raised by county council at a July work session, at which Arrowsmith presented multiple financial strategies for covering increasing expenses.

The scenarios ranged from a single, immediate 52 percent rate increase to a 10 percent increase with subsequent increases of eight and five percent over several years, along with a provision for the county’s general fund to pay off the existing Los Alamos Wastewater Treatment facility.

Board members and councilors requested that the DPU investigate smaller incremental rate increases spread out over a number of years to lessen the immediate financial impact to customers.  

Arrowsmith and Deputy Utilities Manager Robert Westerville arrived at the current solution after reviewing residential and commercial rates. The review revealed that residential usage shows very little variance, whereas commercial usage can range from little more than that of a residential household for an office building to tens of thousands of gallons at a car wash. The new rates attempt to more equitably distribute the costs of maintaining the wastewater infrastructure.

DPU is also required to maintain cash reserves mandated by existing debt covenants. This proposal utilizes inter-fund loans to maintain the minimum cash reserves while spreading the rate increase over a five-year period and avoiding a large initial increase.

Board Chair Glenn Woodwell questioned the initial reduction in rates for some residential customers.

“Nearly all the capital expenses coming up benefit residential customers, yet they will be paying less. A lot of those projects don’t benefit commercial customers. Why don’t you bring everyone’s rates up?” Woodwell asked.

“Residential customers historically have paid more than their fair share,” Arrowsmith responded. “This is an attempt to make the system more equitable.”

Arrowsmith said that although many more residences are served, they do not place the same demands on the infrastructure. Sewer lines and wastewater treatment facilities must be constructed to handle the highest volume released into the system at one time, and those demands come from commercial customers.

Arrowsmith also pointed out that an alternative ordinance being proposed would have increases across the board should the board choose to recommend it.

Los Alamos Public Schools Purchasing Manager June Gladney had reviewed the increase and determined it would impact the school system, but not severely. Gladney said the largest water usage was for irrigation and the schools use non-potable water for that.

Customers may provide public comment on the county’s “open forum” website by following the link on the county’s homepage, losalamosnm.us.

The ordinance comes before council for possible approval in January.