Utilities: use more, pay more? | AspenTimes.com

Utilities: use more, pay more?

Aspen’s biggest users of water and electricity would pay higher bills for those services under new rate structures that won an informal nod from the City Council this week.Specific proposals for the revised rate structures will go to the council on Aug. 10, during the third in a series of work sessions devoted to business plans for the city’s water and electric utilities.The city’s electric rates have gone unchanged for 12 years, and its water rates have remained stable for 17 years. Now, rate hikes are contemplated both to keep up with utility costs and capital needs, and to encourage conservation by charging more to those who use more.Aspen’s municipal electric utility’s rates are currently the eighth lowest among 51 utilities across the state. A “modest” rate increase is necessary to increase revenues by 5.7 percent over the next decade, according to John Gallagher of Black & Veatch, the Denver-area consultant who has been hired to assist the city in drafting new business plans for the local utilities.That 5.7 percent increase would allow the city to maintain its present mix of energy sources – 57 percent comes from renewable sources such as hydro- and wind-generated power. The remainder comes from coal-fired power plants.Rate hikes of 2.8 percent in 2005 and 2006 would suffice, according to Gallagher. That would mean a $2.13 increase on the average monthly bill for a residential customer.Increasing the city’s purchase of renewable energy would require higher rate hikes, he said.However, rather than an across-the-board rate hike, Gallagher has recommended a three-tiered rate structure for residential customers and a two-tiered system for commercial users. Currently, the city charges just one residential rate and one commercial rate.The tiered system would force big users to pay more – especially large commercial users of electricity during peak hours of demand, he explained. It could also entice those consumers to time their heavy uses of electricity during non-peak hours, when it’s cheaper to provide.”This is a much more equitable rate structure,” Gallagher said.Even if the city raises its electric rates, it would charge less than a number of other utilities, noted Steve Barwick, city manager.”We’ll still be less than average in Colorado, even with a significant increase – we’re that far down the curve,” he said.The city’s water utility needs to increase revenues by 33.2 percent over the next four years to position itself for close to $11 million in upgrades and maintenance to the water system over the next decade, according to Gallagher.Generating the additional revenues could be accomplished by, for example, an 8.7 percent annual rate increase in 2005 through 2007 and then a 3 percent hike in 2008, he said.Instead, Gallagher has also recommended a three-tiered rate structure for water customers, based on use. Some customers who use little water could actually see their bills drop, he said.”If you’re conserving water, you’re going to be rewarded,” he said.Currently, the city has two tiers and a seasonal rate structure. In the winter, water users who use less than 15,000 gallons per month pay one rate; those who use more than 15,000 gallons pay another. The threshold from May through September is 30,000 gallons and for big consumers of water, the rate is actually lower in the summer.”It doesn’t really encourage water conservation,” Gallagher said.He has suggested the city get rid of the seasonal rates and adopt three tiers of rates that are constant year-round.The existing rate structure actually encourages water use, according to Paul Menter, city finance director.”It’s cheaper as you buy more,” Barwick agreed.Councilman Terry Paulson questioned whether the new rates would make water expensive enough for residential users in the highest tier.”It’s pretty obvious in this community that money is not an object for some people,” he said.Janet Urquhart’s e-mail address is janet@aspentimes.com

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