2016 Rate Update Summary

2016
Water rates for multi-family and single family users have gone from a 5-tier rate structure system to a 3-tier system.  While the amount of water available at the first tier has changed, it is also important to note that rates for the first two tiers are lower than in 2015.  Your monthly charges are dependent on actual use.  However, with a $1.06/month increase in the base charge ($28.16 to $29.22) and no increase to wastewater charges, the average residential customer will have an increase of approximately 1.18%, annually, under the new tier system. 

Commercial customers have a uniform rate per 1,000 gallons.

Irrigation customers saw an increase of 2.2% in base and volumetric charges, however this customer class will be going to a uniform rate per 1,000 gallons in October of 2016. 

There were no increases to wastewater rates for 2016.

Why Move to a 3-Tier Water Volumetric Rate Structure For Residential Use?


The New Residential Water Rate Structure

Using water wisely and conservation of this precious resource are key objectives of the new structure.  The new 1st tier, (up to 6,000 gallons) reflects indoor use for the majority of our customers.   This generally provides water for fundamental household needs, like showering and washing, at the lowest tier. The cost per 1,000 gallons for the first tier in 2015 was $2.63, and is now $2.20.   A good thing to note is that while the amount of water available at the first tier is going from 10,000 to 6,000 gallons, the price at the first tier, 2015 versus 2016, dropped.



Water use within the 2nd tier, (6,001 to 20,000 gallons) generally includes the water needed for landscape irrigation for most customers.  Why does water for irrigation cost more than water used indoors?  In order to meet the increased demand for irrigation, the water system has to be built for the summer day when everybody needs a lot of water.  In fact, half of the water produced in a year is put on landscapes during the hottest three or four months of the year.  That means that a lot of infrastructure is only used to satisfy this “peak” irrigation demand, making this water more expensive to produce and deliver during a few short months. Again, a good thing to note is that in 2015, the cost of water in the second tier was $4.27, and has now gone down to $4.12 per thousand gallons.
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Those using more than the average customer for indoor and outdoor use combined, generally over 20,000 gallons monthly (the new 3rd tier), will see a cost per thousand gallons of $8.51 used at this tier.  This cost encourages efficient water use and conservation, while covering the higher seasonal/peak costs associated with producing and delivering that water.  Those customers with homes on larger lots having more irrigated landscape, or who choose to use more than 20,000 gallons per month, will likely see higher water bills.
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COMMERCIAL CUSTOMERS


Commercial customers include everything from restaurants, retail, car washes and gas stations, as well as schools and other government facilities.  

Commercial customers went from a tiered rate system to a uniform rate of $3.60 per thousand gallons.  While types of commercial uses might vary, in general, commercial use is relatively stable, so using a uniform rate structure is a common industry practice.  Monthly service fees are based on the size of the meter, for both water and wastewater.  So the larger the tap, the larger the monthly charges.

IRRIGATION CUSTOMERS


Irrigation customers are those that have dedicated taps for serving irrigation for parks, ballfields, streetscapes and common areas, which are often managed by homeowners associations.  Currently, irrigation customers are on an inclining block 5-tier structure.  However, this will change in October to a uniform rate of $6.45 per 1,000 gallons.
Some of the main objectives of the 2014 Cost of Service Rate & Fee Study were to:
✔  Address previous subsidizing of irrigation customers by other user categories;  
✔  Promote conservation; and
✔  Provide time for HOA’s to address irrigation system inefficiencies.
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Dedicated irrigation taps – services used exclusively for irrigation – contribute to seasonal high demand periods, known as “peaking”.  The water system has to be able to support this seasonal increase in water use that occurs within a 3 to 4 month period.  Typically, about half the water PWSD produces in a year is used for irrigation during a few short summer months.  The following production graph shows the how water production increases to serve irrigation demands.  This type of peak use is expensive to produce and deliver, and those costs are passed on to all irrigation users.
In order to help HOA’s have time to become more efficient water users, the new uniform rate will not go into effect until October 2016.  In an effort to improve HOA irrigation efficiency and determine irrigation requirements, PWSD is offering “Slow the Flow” irrigation audits and GIS services to help identify irrigation system deficiencies at no cost to the customer.  

Rebates are also available for retrofitting of old irrigation controllers, and upgrading irrigation sprinkler heads.  Contact us at Conservation@PWSD.org to learn more about our rotary nozzle and Smart Irrigation Controller rebates.  

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HOW DO WE COMPARE TO OTHERS?


Water rates vary along the front-range.  Some utility providers offer only water services, while other utilities offer wastewater services.  Charges can also vary based on other factors such as how big the utility is and where they get their water.  Here in Parker, we are transitioning from an all ground water well based system to a renewable water source with the Reuter Hess Reservoir.  


MORE ABOUT HOW RATES & FEES ARE CREATED


PWSD subscribes to the standard industry practice of using cost-based principles for establishing rates and charges.  While this process is technically challenging, this method is generally considered fair and equitable because rates are designed in a way that each class of customer pays the costs allocated to serving that class and cross-class subsidies are avoided.  

Objectives of rate making include:
✔ Effectively covering revenue requirements in a stable and predictable manner.
✔ Promotion of efficient water use – an important thing in our semi-arid state!
✔ Striving for equity across different types of water users so that each customer is paying for the demand they are creating.
✔ Making rates understandable and simple to administer.

With these objectives in mind, PWSD is keeping our end user – you, our customer – as the main focus.  Our goal is to provide water to our customers today and in the future.  This helps protect property values and quality of life for those we serve.  To learn more about our rates and fees study, click here.