Residents’ water bills to go up

Friday, June 22, 2001 | 11 a.m.

Water rates in the Las Vegas Valley will go up in the foreseeable future because of increased electricity costs.

Rates have been stable over the past five years, but electricity costs that are projected to have more than doubled between 2000 and 2003 are forcing increases.

The Colorado River Commission, the state agency responsible for providing power to the Southern Nevada Water Authority, has been able to mitigate electricity price increases through long-term electricity contracts and the sale of excess electricity. Power costs now, however, are rising even with those mitigating factors, although the water authority continues to pay about half what other power users do.

Power costs will continue to rise rapidly over the next year at least, George Caan, executive director of the Colorado River Commission, told the authority Thursday.

Increased power costs have already led to a wholesale price increase of about 30 percent, which local water companies could pass on to residential and business customers within a year.

Caan said the cost of a megawatt hour has gone from $28 last year to about $42 now. A megawatt hour will likely be $70 next year, he said. A megawatt, which is 1 million watts, is enough to serve about 1,000 Las Vegas homes a month from October through May, and 500 Las Vegas homes a month during the summer.

According to a commission report, the costs are directly related to the skyrocketing cost of natural gas, the primary source of fuel for electric generators throughout the West.

California has been the hardest hit state for both power prices and availability, with rolling blackouts predicted to continue through the summer.

The costs for the water authority are still a far cry from the prices paid by large customers on the wholesale spot market. According to the report, electricity prices for other customers at the same energy source will be about $600 a megawatt hour through the next three months.

The Colorado River Commission has the statutory responsibility to provide power to the water authority, which coordinates water delivery throughout Clark County.

Last year cost-saving strategies cut the cost of power to the authority in half, from about $25 million to $12 million.

Caan told the board that the high energy prices will likely remain unabated for two years.

By 2003, "We will start to see the curve trend downward," he said.

Power plants now under construction are expected to relieve the situation in 2003 or 2004, the report said.

But the power markets and cost to the water authority are likely to remain extremely volatile for some time to come, Caan said. Ironically, a Federal Energy Regulatory Commission decision to put a ceiling on power costs throughout 11 Western states, including California and Nevada, hurt the authority.

The commission is able to sell excess power during high-demand times, offsetting the cost of the electricity. The price ceiling also affects the prices the commission can charge buyers, Caan said.

Authority Chairwoman and Clark County Commissioner Mary Kincaid-Chauncey said the end result for water users tied to municipal systems in the Las Vegas Valley will be higher prices.

The wholesale cost of water has been at about $157 an acre-foot since 1996, but the authority on Thursday raised the wholesale price to $200 an acre-foot for treated Colorado River water.

Those costs may be passed on to consumers through their local purveyors (such as the Las Vegas Valley Water Authority), Kincaid-Chauncey said.

"This power thing affects everybody in every phase of life," she said.

She said consumers would have been harder hit if the Colorado River Commission had not been able to control power costs as effectively as it has.