Big Costs Lead To City Rate Hikes

Rio Rancho took big hits paying for water infrastructure to the City Center and arsenic treatment systems, and its chronically leaking pipe network needs repairs.

Those are some of the reasons why Rio Rancho water customers face water rate increases.

Councilors on Wednesday approved the first reading of an ordinance that will raise water rates by 8.8 percent annually for five years.

The recommended increases are based on a Red Oak Consulting study that showed revenue from water and wastewater rates at $38.4 million for the fiscal year that began July 1, while revenue requirements are projected to be $39 million.

Public Works Director Scott Sensanbaugher said the financial outlook led Fitch Ratings last year to downgrade its rating for bonds used to pay for water and wastewater improvements. Without rate hikes, the city risks another downgrade, which would increase borrowing costs, he said.

Key factors in shaping the present financial situation, Sensanbaugher said, was an unfunded federal mandate to reduce arsenic levels in the city that cost $25 million and $14 million to provide a water tank, pumps and other infrastructure to supply the City Center.

“None of that had been programmed into the budget,” Sensanbaugher said, adding “rates had not been adjusted at all to pay for that.”

There were no rate increases between fiscal 2006 and fiscal 2011, which started July 1, 2010. Water and wastewater rates rose 5 percent in fiscal 2011, and by 3.3 percent in each of the following two years. A $3 per month water acquisition fee was introduced in fiscal 2011 and soon after raised to $5 per month.

In an interview on Thursday, Councilor Chuck Wilkins, a former water utilities commissioner, characterized the rate increases as sufficient to keep pace with inflation but not enough to provide enough to repair aging city water lines and cover other major costs.

The city’s capital improvement plan shows the number of water service leaks has increased nearly every year from 2007, when there were 652 leaks, to 950 in 2011.

If approved at a second reading scheduled in early January, the increases would mean:

♦ Monthly service charge for 5/8-inch meter (the most common residential size) would increase from $7.84 to $8.53.

♦ Monthly wastewater service charges for all meter sizes would increase from $10.08 to $10.97.

♦ The volume classes for water rates would change, with the maximum for the lowest cost tier reduced from 10,000 gallons to 6,000 gallons. That rate would increase from $3.62 to $3.94.

Other proposed increases include changing the charge for opening or reactivating an account from $25 to $45, and the reconnection fee from $50 to $75.

The ordinance would add $1 to the water rights acquisition fee -bringing it to $6 per bill. Rates for reclaimed water used by Chamisa Hills Golf Course and Vista Verde Cemetery would also increase from just under 50 cents per 1,000 gallons to 50 percent of the commercial rate for potable water, or $2.30 per 1,000 gallons.
— This article appeared on page 15 of the Albuquerque Journal