Increase in water rates over two years gets OK

Thursday, Sept. 17, 2009 | 1:48 p.m.

Ring in water rate hike with new year, through 2012

For Want of Water: Find video reports, interactive graphics and expanded coverage of Las Vegas' water shortage

Southern Nevada Water Authority

The Southern Nevada Water Authority Board of Directors voted unanimously today to raise water rates over the next two years.

Following a spirited debate, the board agreed to raise the rate it charges municipal water agencies by 10 cents per 1,000 gallons starting in January 2010 and another 10 cents per 1,000 gallons starting January 2011.

The board decided to put off a decision on whether to raise rates another 10 cents per 1,000 gallons in 2012 until it can determine whether the raise is necessary.

The change will increase the cost of water to municipalities by about 3.2 percent in the first year, SNWA spokesman J.C. Davis said.

The effect on consumers is less clear because the municipalities have not yet decided if or how to pass that increase on.

If the rise is passed on directly to customers, it would mean a 10 cent increase for each 1,000 gallons used. For the average single-family customer using 13,000 gallons per month, it would be an increase of about $1.30 per month in the first year and $2.60 per month in the second year.

If the water authority board votes to increase the rate another 10 cents in 2012 and municipalities pass that increase on to customers it could mean an annual increase per household of $46.80 per year compared to today's rate.

Water authority staff requested the increase as part of a larger attempt to sustain funds in its capital improvement accounts and maintain its bond rating. The authority has taken a hit to its bank account in the downturn due to reduced income from connection fees. It has tried to make up the difference by cutting costs and sidelining some capital improvement projects. (The board today also voted to scuttle plans for a new pump station for the third straw project under construction at Lake Mead and is instead retrofitting the pump for the second straw to work with both.)

Keeping those accounts full is key to the water authority's ability to acquire financing for projects like the third straw and to do so at a low interest rate. The drop in income this year already has caused the agency's debt-to-capital ratio to change enough to cause its bond rating to fall slightly. The agency doesn't want to see it drop further because it would raise costs for projects.

Discussion: 7 comments so far…

By burnemandturnem

9/17/09 at 2:47 p.m.

Suggest removal

Any undergrad economics student will tell you that the most effective way to allocate and conserve a valuable commodity is the "pricing mechanism". For far too long water has been priced way below it's true value, (ask that same student to explain the "tragedy of the commons"), and the result has been disgraceful waste, mostly through irrigation.
There's also no doubt that the water district had to ignore this common sense for a long time because of the greed of developers. They kept the rates too low for too long. We live in a desert! Can't we all, as a community, start acting like it, and paying like it? If you want a lush, green lawn then move back east where you have 50 inches of rainfall a year! Jack up the rates for a sustainable Southern Nevada!!
P.S. Is the wonderful book "Cadillac Desert" still in print?
By BorisR

9/17/09 at 3:04 p.m.

Suggest removal

Vegas is in the middle of the desert. Lake Mead and Hover Dam were built at a time when poupulation was in the percentages of what it's now. There were no golf courses and water fountains in front of the hotels. In other words: Times have changed. As a frequent visitor of Vegas it would be sad to see this city to go down for some water shortage or whatever. A raise of water price in order to use that money for building a water pipeline would be a great idea. In my country, high taxation for the casino revenues are being used to finance our social security. Another way to solve problems that are getting bigger and bigger the older people get. I don't think that golf courses are something that belongs in the middle of the desert. Pure waste of water needs to be punished, people who use more water than others should pay more, if necessarily, in progression.

From Switzerland
By Noindex

9/17/09 at 3:24 p.m.

Suggest removal

How are people "wasting water" if they are the ones paying for it?

We keep getting utility increases because we are forced to conserve which means less revenue for the utilities, who must then increase the rates to make up for the lost revenue due to conservation. We should be rewarded for conserving....not punished with higher rates. This scam is quite a racket!
By mrxroc8

9/17/09 at 4:03 p.m.

Suggest removal

The Southern Nevada Water Authority (SNWA) by authority of it's quasi-government Board of Directors has decided to raise the DELIVERY RATES of the water allocated to the people of Nevada.

While the Board of Directors sets policy direction for the SNWA, the Las Vegas Valley Water District is responsible for the day-to-day management of the organization through an agreement between the SNWA member agencies.

http://en.wikipedia.org/wiki/Southern_Ne...

The President and CEO of the Las Vegas Valley Water District is Rory Reid.

http://www.lvvwd.com/about/board_bod_rei...

The Board has the sole authority to set rates and charges for water. Such rates and charges must be reasonable and cannot be put into effect until after a public hearing. The enabling legislation that created the District, in conjunction with various bond covenants, require that rates and charges be sufficient to provide for operation and maintenance costs, general expenses of the District and debt service payments

https://www.lvvwd.com/assets/pdf/financi...
http://www.snwa.com/assets/pdf/snwa_cafr...

This rate increase is to cover the Construction Bonds for projects like Coyote Springs. Because the Nevada Public Utilities Commission has no authority here...there is nothing you can do about it!

Coyote Springs Water Resources District
http://www.lvvwd.com/smsys/coyote.html

Coyote Springs Water Resource District Board of Trustees
http://www.lvvwd.com/smsys/coyote_board....
By term25600

9/17/09 at 5:33 p.m.

Suggest removal

Isn't the SNWA the same group that built the Springs Preserve debacle, and spends like 500k a year supporting it? Close it- hello?

Interesting that its Rory Reid heading up this monumental mess. Isnt the SNWA also the group that occupies (and probably built) that huge office structure at the spaghetti bowl downtown too?

When there is no competition, there are continually escalating rates and eventual shortages. Government just cannot run businesses !! When are we as a people going to just accept that.
By AngryReader

9/17/09 at 10:25 p.m.

Suggest removal

Time to cut the budget not to raise rates.

Close that joke of a theme park.
By mcmc_john

9/18/09 at 12:09 a.m.

Suggest removal

Does anyone know when the Sun is going to update their "run out of water" chart (http://www.lasvegassun.com/news/topics/w...)

I think the new date will be 2012

Ask if the SNWA is going to be able to have the third intake pipe done by 2012 .... and what happens when their bonds drop to junk bond status?

Remember the construction trade unions picketed the SNWA to slow down home construction in 2003.. But they kept building, over 100,000 new homes since 2003 ... and now look at the mess we are in... in fact they are still handing out more water hook ups.... . WHY?