New water rates to rise slightly in 2021
The importance of a clean, safe, reliable drinking water supply has been highlighted this year, as health officials have repeatedly urged regular hand-washing to reduce the risk of spreading COVID-19.
And in a year when so much has changed, Denver Water’s commitment to its customers hasn’t wavered.
Ensuring the complex system that delivers water to one-quarter of the state’s population keeps humming along is no easy task. To pay for this critical system, Denver Water relies on water rates, bond sales, cash reserves, hydropower sales and the fees paid when new homes and buildings are connected to the system.
Throughout the year, the utility’s teams in the mountains continued their work to oversee a system that collects water from across 4,000 square miles of watershed and delivers it to reservoirs and treatment plants. At Denver Water’s three drinking water treatment plants, staff came to their posts daily, ensuring the water was cleaned and readied for the next leg of its journey.
The utility’s maintenance crews also were on the job day in and day out, ensuring the more than 3,000 miles of pipelines in Denver Water’s system would carry clean, safe water to homes and businesses across the metro area.
And while that work continued day in and day out, Denver Water in January 2020 launched its biggest public health campaign in history: the Lead Reduction Program, which will reduce the risk of lead in drinking water by replacing over the course of 15 years an estimated 64,000 to 84,000 old lead service lines put in place decades ago across the service area.
The water Denver Water delivers to customers is lead-free, but lead can get into drinking water as it passes through customers’ lead service lines and indoor plumbing that contain lead. 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.
To help pay for this new public health program aimed at protecting children and families now and for generations into the future, Denver Water’s Denver Board of Water Commissioners on Oct. 28 approved a rate increase of 1.5% to take effect Jan. 1, 2021.
“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 increase to 1.5%, ensuring we can cover the cost of our new Lead Reduction Program and keep that moving forward.”
Denver Water does not make a profit or receive tax dollars. The utility reinvests money from customer water bills to maintain and upgrade the water system.
Covering costs associated with the Lead Reduction Program
For typical single-family customers who receive a bill from Denver Water, if they use the same amount of water in 2021 as they did in 2020, the new rates will increase their monthly bill by 67 cents or less, depending on where they live in Denver Water’s 335-square mile service area.
“In addition to the new Lead Reduction Program, we continue to move forward on a series of major, multiyear projects to ensure we’re delivering safe, reliable water to our customers,” Lochhead said.
“Our rates fund important projects like building a new state-of-the-art water treatment plant and laboratory, expanding a key reservoir and the ongoing replacement of aging water pipes. While costs to maintain and upgrade this system continue to rise, we have worked in the past and will continue in the future to keep rate increases as small as possible,” he said.
All residential customers will see a slight increase in both the fixed monthly charge and the price per gallon.
Inside Denver, a residential customer who uses 102,000 gallons in 2021 as they did in 2020 will see an overall rise in the monthly bill of 67 cents. Residential customers outside the city who use that amount of water will see a monthly increase of between 45 cents and 54 cents under an agreement between Denver Water and its suburban distributor partners for 2021 to share costs associated with the Lead Reduction Program.
A single-family customer in Denver who uses 102,000 gallons in 2021 can expect their annual water bill to be $533, up from $525 in 2020. A single-family customer who lives in a “total service” suburban water district, meaning Denver Water handles the billing, water delivery and system maintenance, can expect their 2021 annual water bill to be $716, up from $711 in 2020.
Denver’s city charter requires Denver Water suburban customers to pay more for their water than customers inside the city limits. Master Meter Distributors, who receive water from Denver Water on a wholesale basis, set their own rate schedules for their customers. More information about Denver Water’s Distributor partners can be found here.
Cutting costs and helping customers
Denver Water also has worked throughout the pandemic to reduce its costs and help customers. The utility has taken steps to reduce its 2020 budget and took advantage of lower interest rates to refinance some existing bonds, which will save 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.
Ensuring the water keeps flowing
Denver Water’s five-year, proposed $1.5 billion capital plan includes about 100 major projects. The projects are focused on maintaining or upgrading infrastructure and ensuring the utility has the flexibility needed to provide a reliable water supply as weather patterns in the future veer from the past and the population grows.
Money from rates help fund major projects, including the construction of a new, state-of-the-art water treatment plant, installation of a new 8.5-mile water pipeline to replace a pipeline that was built in the 1930s, the expansion of Gross Reservoir to provide a more reliable future water supply, construction of a new water quality lab to ensure Denver Water is meeting the highest quality standards, and the investment of more than $140 million to repair and replace water pipes.
A customer’s monthly bill is comprised of a fixed charge, which helps ensure Denver Water has a more stable revenue stream to continue the necessary water system upgrades to ensure reliable water service, and a volume rate for the amount of water used.
The fixed monthly charge — which is tied to the size of the meter — is increasing slightly in 2021 to ensure Denver Water is recovering 20% of its needed revenue from fixed charges.
After the fixed monthly charge, Denver Water’s rate structure for has three tiers based on the amount of water used.
To keep water affordable, the first tier, which covers essential indoor water use for bathing, cooking and flushing toilets, is charged at the lowest rate.
The amount of water in this first tier is determined for each customer by averaging their monthly water use as listed on bills dated January through March each year. This is called their average winter consumption. Water use above the average winter consumption — typically used for outdoor watering — is charged at a higher price.
As drought conditions have spread across Colorado throughout the summer and fall, Denver Water’s supply and drought experts are meeting regularly, keeping a close watch on weather forecasts, drought levels and soil conditions in the state’s mountains and preparing for what those factors might mean for the metro area in 2021.
The utility also is urging customers to take stock of their water use inside and outside the home, eliminate leaks and continue to find ways to use water more efficiently. Tips for reduce indoor and outdoor water use can be found at denverwater.org/BestPractices.