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April 16, 2014

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Your water bills are likely to rise again next year

Clark County Commissioner Steve Sisolak

Clark County Commissioner Steve Sisolak

Water rates in Southern Nevada may go up again next year.

A technical committee of the Southern Nevada Water Authority will likely recommend next month a new rate structure with increases for all consumers — from small homes to large casinos and golf courses.

Committee members on the Integrated Resource Planning Advisory Committee have finalized most of the broad contours of the rate increase — a 50/50 split between fixed and variable costs — and the freezing of fire-line charges.

Under the plans, the new rates would be phased in from 2014 to 2017. For a small home, the median monthly bill could jump from $34 now to $39 in 2017, and a larger home's bill could increase from $306 to $331 by 2017, according to a spreadsheet provided by the water authority.

The committee wants to split the rate increase so that consumers will pay more both in fixed infrastructure costs — installing and maintaining the pipes that bring water to homes and businesses — and in variable costs, or the amount of water you use. That way, ratepayers can have some control over their bills.

“If people wish to try to conserve more, the idea is that they'd see some savings,” said Brian McAnallen, the Las Vegas Metro Chamber of Commerce's representative on the water authority's advisory committee.

These recommendations are not final, and they still require a lengthy process of meetings during the coming months.

Members of a committee of community stakeholders, including business owners, homeowners, gaming companies, labor unions and other ratepayers, reviewed financial data from the water authority's consultants, Hobbs, Ong & Associates, to calculate the planned rate increases.

Rates are likely to increase because the water authority's bills will increase in 2016 when it has to make higher debt payments. This year, the authority needs to pay $132.2 million in debt. Three years from now, those debt payments jump to $216.7 million.

Stakeholders on the advisory committee have indicated that they'd like to gradually raise rates so businesses and consumers aren't hit with one, huge rate increase three years from now.

Clark County Commission Chairman Steve Sisolak, who attended the committee meeting Wednesday, said he's concerned about making sure the process is fair and that rate increases are spread among all water users.

The water authority took out bonds to pay for projects during the past decade, including the major project to drill a third intake pipe to draw water deep from Lake Mead should water levels continue to drop below the first and second intakes.

Now the bills have come due, and Sisolak said he sees the rate increases as inevitable.

“This is something we have to do,” Sisolak said. “This is money water authority officials way before me decided to allocate for the third intake. Now the bill has come due. ... This isn't for new money to spend; it's already been spent.”

Sisolak will vote on the rate increases later this year because he sits on the seven-member board of the Southern Nevada Water Authority. He said he wants to ensure that everyone from the smallest to largest water users pay their fair share.

The perception of fairness became an issue last year as the water authority continued to struggle with revenue challenges due to the recession. The agency paid its bills through connection charges on new construction, and the money flowed in during the boom.

But construction and development halted during the housing crisis, meaning the water authority no longer could rely on new connection charges to pay its bills. And ratepayers have had to bear more of the costs.

Last year, some businesses said they were hit hard when the water authority began to charge money for so-called “fire lines,” the pipes that bring water to a structure in the event of a fire.

The committee recommended freezing fire-line charges at 2013 levels.

“What they're paying today is what they'll pay going forward for fire lines,” McAnallen said.

That decision could mitigate some of the outrage surrounding last year's debate when some businesses went from paying nothing to paying hundreds of dollars a month for the fire-line surcharge.

Beyond the rate increases, committee members at Wednesday's meeting debated at length policies for spending any extra revenue the water authority collects through rate increases should actual collections come in higher than projected.

Although rates are likely going up, there may be a silver lining for ratepayers.

The region's economy is improving, meaning other sources of revenue could blunt these increases.

“We've had an upward adjustment in a couple of revenue areas, and that offsets the need to raise rates,” said Guy Hobbs, financial adviser to the water authority.

The committee plans to make a final review of Hobbs' model and make an official rate recommendation Sept. 4.

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