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What is the cost of SDS?
It will cost about $880 million to build the SDS pipeline and related facilities. The cost of the construction plus the interest on the money borrowed will amount to approximately $2.3 billion over 40 years. It is essentially the same concept as buying a home. For example, if you purchase a house for $100,000, after you have paid the 30 year-mortgage, you will have paid the bank some $350,000. By financing over a longer term, it makes the monthly payment more affordable.
How does SDS impact water rates?
City Council has approved water rate adjustments beginning in 2009 through 2012 to fund the ongoing operation and maintenance of our existing water system and the initial construction of SDS. Four more rate increases are expected through 2016.
These increases are necessary not only to pay for SDS, but also to pay for operating and maintaining our current water system. In fact, about one-third of the increases are being used for the existing water system.
Rate increases would be necessary with or without SDS. Without SDS, Colorado Springs would be forced to use a less reliable and more expensive, piecemeal approach to supplying water without the long-term benefits of SDS.
Construction of SDS is being phased in to spread rate increases over several years and help avoid sharp annual rate spikes. This also helps to share costs between current and future customers.
What does that mean for average monthly water bills?
In 2011 and 2012, water rate increases equal about $5 per month for the average residential customer – (about the cost of three bottles of store-bought water).
These increases are necessary not only to pay for SDS, but also to pay for operating and maintaining our current water system. In fact, about one-third of the increases are being used for the existing water system.
Rate increases would be necessary with or without SDS. Without SDS, Colorado Springs would be forced to use a less reliable and more expensive, piecemeal approach to supplying water without the long-term benefits of SDS.
Construction of SDS is being phased in to spread rate increases over several years and help avoid sharp annual rate spikes. This also helps to share costs between current and future customers.
Have we seen this level of increases before?
Yes. Rate increases are common to pay for large infrastructure projects. Water rates doubled during the construction of the Homestake water system in the 1960s and then remained relatively stable following that project. Today we rely on the Homestake pipeline to deliver up to 70 percent of our community’s water supply. Without this investment decades ago, many Colorado Springs residents would not be living here today.
Your Water Bill – How Does Colorado Springs Compare?
Water rates in Colorado Springs are about average in Colorado. Cities such as Denver and Pueblo, which have large rivers bringing their water into town, have lower water rates. Cities such as Aurora, Lakewood and Fountain have to construct, operate and maintain complex water conveyance systems to bring water to their communities – similar to Colorado Springs. Water costs for these communities are higher.
Water in the Western U.S. is a limited resource. Denver Water is projecting 30 percent water rate increases over the next few years, even though they are located on a major river and not building a large water project. Rate increases for Aurora’s Prairie Waters project were comparable to those needed for SDS.
Are Builders and Developers Paying their Share for SDS?
Increases in development (tap) fees for new homes have been and will continue to be used to pay for SDS. Average development fees have increased by about 138% since 2002 in anticipation of the costs required for SDS. For each new home that’s built, builders and developers pay an average of more than $9,000 for a new water tap.
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