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Water rate hikes ‘probably inevitable’ after revenue drops, utility says

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Albuquerque’s water utility will likely need to increase the amount of money it charges businesses and residents for water, as conservation eats into the agency’s revenue, the vice chairman of the utility’s board of directors said Wednesday.

“Rate hikes are probably inevitable,” said Rey Garduño, vice chairman of the Albuquerque Bernalillo County Water Utility Authority board.

With a combination of heavy rains and conservation, Albuquerque water use from July to September was down 15 percent from the same period a year before, leaving a $3.6 million hole in the agency’s budget, agency Chief Financial Officer Stan Allred told the board at its regular monthly meeting.

Allred said the agency’s staff is already looking at ways to reduce spending on the agency’s capital improvement program, an effort to catch up with a massive backlog of aging pipes and water and sewage treatment infrastructure.

Board members made no specific plans for a rate increase but said a community conversation about the issue is needed.

Part of the problem, according to community activist Michael Jensen of the group Amigos Bravos, is that the agency’s rates have failed in recent years to keep pace with inflation.

“The water utility authority just failed to keep up,” Jensen said, showing board members an agency chart showing the gap in recent years between rising costs and rising rates. “You’re digging a hole.”

The dilemma Albuquerque faces is one example of a nationwide problem, according to a national water rates analysis done by the nonprofit organization Circle of Blue. Widespread water conservation efforts are reducing use and agency revenue along with it, but the bulk of water agencies’ budgets go to fixed costs of maintaining pipes and plants, regardless of how much water or sewage is moved through them, Circle of Blue noted in a June report.

To try to deal with that problem, the Albuquerque utility’s board two years ago approved a series of rate hikes. The first went into effect July 1, with additional hikes already planned for 2015 and 2017. But Allred acknowledged that if conservation continues to be more than the agency has planned for, more rate adjustments may be needed.

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