October 6, 2010

Potential 2011 Water Rate Increase: We’ll Pay as We Go

DMWW Board of Trustees has not made a specific decision about the size of any water rate increase for 2011.   They will do so at their October 19, 3:30pm Board meeting.  The Trustees have only concluded thus far that water rates and charges need to keep pace with the utility’s Cost of Services. Rates will be set before board members vote on the utility’s budget in November. If approved at the October 19 Board Meeting, water rates will take effect April 1, 2011.

Instead of taking on debt to invest in improvements, a water rate increase is being considered to help bring revenues in line with costs. We have a lot of money invested in water pipes, pumps and treatment plants, and we need to keep up with that investment in maintaining those facilities.  DMWW’s revenue has not kept pace with costs since 2003.  DMWW pays all of its operating expenses but is not collecting sufficient revenue to pay for the needed infrastructure improvements.  The Board of Trustees recognizes DMWW cannot continue this trend without saddling future rate payers and generations with a large tab because of the failure now to set rates and charges to cover the true cost of the utility’s operations.

In spite of these financial and source water challenges, DMWW continues to produce high quality water for our customers.  One example of our exemplary water quality is the recognition received in April 2008 by Forbes.com who ranked Des Moines as being the best city in America for clean drinking water.

Rates for the typical Des Moines customer could go up between 10 percent and 13 percent next year to help bring revenues in line with costs. That would result in water bills that are $1.50 to $2.00 more per month for a two-person household.  Monthly increases would range between $2.00 and $3.00 for the average four-person household.  Currently, the water portion of the bill for an average two-person household is about $15.00 a month and roughly $25.00 for a four-person home.

The proposed rate increase is in response to increases in costs to treat the water and maintain our distribution system. DMWW is committed to spending our limited resources wisely and continually evaluates our programs to be as efficient as possible.

Chemical prices are expected to increase approximately 5 percent in 2011. While significant, the increase is less than those seen over the past few years.  Complex pollution issues in the Raccoon and Des Moines rivers, such as routinely elevated levels of fecal bacteria, often complicate the treatment process. Various stretches of the two rivers are on Iowa’s impaired waters list because of problems with bacteria, algae and nitrates, among numerous biological impairments. Water Works staff continues to emphasize the need for aggressive improvements in the sprawling watersheds that feed into the rivers.

Also, wetter-than-average summers over the past three to four years have led to decreased demand and relatively flat water sales.

The last rate increase was April 1, 2009.  The availability charge, the fixed amount of the water bill intended to cover Water Works fixed costs per customer whether or not any water is used, was increased by $2.00 per month in April 2010.

Posted by: Randy Beavers 1 Comment
Labels: , , Posted in Rates, Value of Water

One Response to “Potential 2011 Water Rate Increase: We’ll Pay as We Go”

  1. March 23, 2011 at 3:09 pm, Water Rate Increase Effective April 1 | Des Moines Water Works said:

    […] For more information on the rate increase, please refer to an October 2010 blog article. […]

    Reply

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