Department of Public Utilities Deputy Manager Jack Richardson

To generate revenue needed for current operations and to build cash reserves for future infrastructure needs, the Department of Public Utilities (DPU) is recommending multi-year, stepped rate increases for water and sewer.

The rate increases were introduced to the Board of Public Utilities (BPU) during its Sept. 18 meeting. No action was taken; it was a preliminary discussion.

Deputy Utility Manager Jack Richardson presented the proposed rate increases to the board.

Basically, he said, DPU is proposing the last three years of what is essentially a 10-year plan for rate increases in the County’s water and sewer funds.

“For about seven years we have been raising rates pretty aggressively and about three years ago we took a step to formalize those rate increases and finalize our financial models,” Richardson said.

These increases, if approved by Los Alamos County Council, would occur over the next three years. The proposed rate increases for the water rates are 5, 4.25 and 4 percent, respectively. The suggested rate increases for sewer are 6, 3 and 2 percent, respectively.

Richardson said the proposed increases are lower than the rate hikes approved in the preceding seven years. He also noted that the proposed rate hikes over the three-year period step down each year.  

According to the staff report, the average monthly residential water bill is projected to be $43.82 in FY2020, $45.70 in FY2021 and $47.52 in FY2022.

For sewer rates, according to the staff report, if the rate increases go into effect than the monthly residential sewer bill is projected to be  $54.32 in FY2020, $55.95 in FY2021 and $57.07 in FY2022.

These rate increases will assist DPU in meeting its financial goals, Richardson said.

“Once we get to that point we will be in very good shape financially … not necessarily that we have met all our financial targets based on financial policies … but we will be on a strong road to get there and our model shows that we will be proceeding toward meeting those financial goals in the future,” he said.

He explained that while DPU is trying to meet its financial cash reserves policy, it also is trying to minimize the impact to rate payers through incremental increases spread out over several years.

He added that after FY2022, if everything goes according to plan, DPU will only need to request inflationary-type rate increases in the foreseeable future.

In comparing Los Alamos with its neighboring communities, Richardson said that DPU’s rates were comparable and “not out of line.”

BPU Board Member Kathy Taylor asked if DPU staff felt confident Council would approve these series of rate increases.

DPU Deputy Manager Robert Westervelt explained the benefits of this multi-year approach.

“Instead of taking four, five, six months to implement a rate that was budgeted at the beginning of the year it is already in the place and we can put it in effect at the beginning of the year,” he said. “Another advantage for our customers … is it is a budgeting tool; they know what their budgeted costs of services will be and they can budget for those increases.”

Westervelt further added that it helps the DPU with planning. If the rate increase is approved prior to the budget, then staff can appropriately plan for maintenance and capital improvement projects with guaranteed revenue. The alternative is that staff needs to be conservative when planning projects because there is a possibility that the rate increase won’t be approved.

Should the BPU and Council approve this multi-year rate increase, Westervelt pointed out that the County is not “locked in.” If the BPU or Council needs to adjust rates, they can do so at any time.

BPU Board Chair Carrie Walker said she liked the multi-year schedule because it offers better communication with the public.

“If we just continue to turn around year after year, bringing back rate increase after rate increase, I think it is really easy to lose communication for what’s necessary,” she said.

People wonder why there is a new rate increase when one was just implemented, Walker said, adding that having a series makes it more honest.

This is not the last time this issue will be discussed. Two public meeting are being held to discuss the water and sewer rate increases. The first is 6 p.m. Oct. 7 at the White Rock Branch Library. The second meeting is 6 p.m. Oct. 10 in the Los Alamos Nature Center.

Plus, to emphasis the critical role water and sewer infrastructure plays in safeguarding quality of life across the United States, DPU staff arranged for the County’s public access channel to air a documentary, Liquid Assets, The Story Of Our Water Infrastructure. Though largely out of sight and out of mind, the film warns that many of these complex systems are aging, neglected, and in need of immediate national and local attention.

The documentary started airing Sunday and will continue to be aired on PAC 8 at the following days and times:
 

• Thursday, Sept. 26 @ noon;
• Sunday, Sept. 29 @ 6 p.m.;
• Wednesday, Oct. 2 @ 6 p.m.; and
• Thursday, Oct. 3 @ noon.