DENVER — Wednesday, Oct. 28, 2020 — The Denver Board of Water Commissioners today adopted rate changes to help pay for its new Lead Reduction Program that launched in January 2020. Denver Water’s rates are designed to pay for critical upgrades and projects to keep its system operating efficiently. The rate change for the Lead Reduction Program will take effect Jan. 1, 2021, and will increase monthly bills for most residents by less than 70 cents if they use water at similar volumes to 2020.
“Denver Water has long had a philosophy of small, slow and steady rate increases to cover the cost of delivering clean, safe water to our customers now and into the future,” said Denver Water CEO/Manager Jim Lochhead. “Under normal circumstances, we anticipated the need for a 3% to 5% increase to cover our existing costs plus our new, groundbreaking Lead Reduction Program. But with the economic consequences of the pandemic evident across our community, Denver Water has cut its costs and scaled back the necessary increase to 1.5%, ensuring we can cover the cost of our new Lead Reduction Program and also move forward on a series of major, multiyear projects to ensure we’re meeting our commitment to our customers.”
The water Denver Water delivers to customers is lead-free. But lead can get into drinking water as it passes through customer-owned lead service lines, the primary source of lead in drinking water, internal plumbing, faucets and fixtures that may contain lead.
The Lead Reduction Program aims to reduce the risk of lead getting into customers’ drinking water by replacing over a 15-year period the estimated 64,000 to 84,000 lead service lines that are in Denver Water’s service area at no direct cost to the customer. Customers enrolled in the program are being provided with water pitchers and filters to use for drinking, cooking and preparing infant formula until six months after their lead service line is replaced.
When the new rates take effect Jan. 1, 2021, all residential customers will see a slight increase in both the fixed monthly charge and the price per gallon of water. Inside Denver, a customer using 102,000 gallons as they did in 2020 would see an overall rise in the monthly bill of 67 cents. Customers outside the city using that volume would see a monthly increase between 45 cents and 54 cents per month under an agreement between Denver Water and its suburban distributor partners for 2021 to share costs associated with the Lead Reduction Program.
Denver Water’s proposed five-year, $1.5 billion capital plan includes about 100 major projects. In addition to the Lead Reduction Program, the projects are focused on maintaining or upgrading infrastructure and ensuring the utility has the flexibility needed to ensure a reliable water supply as weather patterns in the future veer from the past and the population grows.
Among the most important projects receiving money from water rates are building a new, state-of-the-art water treatment plant, installing a new 8.5-mile water pipeline to replace a pipeline that was built in the 1930s, expanding Gross Reservoir to provide a more reliable future water supply, constructing a new water quality lab to ensure Denver Water is meeting the highest quality standards, and repairing and replacing water delivery pipes.
A water bill is comprised of a fixed charge that helps ensure Denver Water has a stable revenue stream to continue the necessary water system upgrades. The fixed monthly charge, which is tied to meter size, is increasing slightly to ensure Denver Water is recovering 20% of its revenue from fixed charges; doing so helps even out revenues over the year.
Denver Water’s rate structure also includes a three-tiered charge for water use (called the volume rate). To keep water affordable, indoor water use — like for bathing, cooking and flushing toilets — is charged at the lowest rate. Essential indoor water use is determined by averaging the customer’s monthly water use on bills dated from January through March each year. This is called average winter consumption. Water use above the average winter consumption — typically for outdoor watering — is charged at a higher price.
Denver Water has worked throughout the pandemic to ensure water continues to flow to customers. It also has taken steps to reduce costs and refinanced existing bonds at a lower interest rate, saving customers $17.5 million due to lower interest payments over time.
Recognizing the economic pressure the COVID-19 pandemic has put on the community, Denver Water, like many water utilities nationwide, in March temporarily suspended water shut-offs related to payments that were delinquent. The utility also offers payment extensions and arrangements, leak adjustments, and has partnered with Mile High United Way to offer a one-time emergency assistance program. Customer Care representatives are trained to work with individuals to address unexpected or special circumstances.
Denver Water operates and maintains more than 3,000 miles of pipe — enough to stretch from Los Angeles to New York — as well as 20 dams, 22 pump stations, 30 underground storage tanks, four treatment plants and more. The water provider’s collection system covers more than 4,000 square miles, and it operates facilities in 13 counties in Colorado.
Denver Water serves 1.5 million people in the Denver metro area. The water provider does not make a profit or receive tax dollars and reinvests ratepayers’ money to maintain and upgrade the water system. The utility is funded by water rates, bond sales, cash reserves, hydropower sales and fees for new service (called System Development Charges).
Customers will see more information about their 2021 rates in their bills and on Denver Water’s website over the next few months.