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11.27.04 M.U.D. looks at water rate hike The Metropolitan Utilities District estimates that it may need to increase water rates about 23 percent by 2012 to pay for its new water plant. The roughly $310 million Platte West plant in western Douglas County is expected to begin operating in 2008 and will expand the utility's capacity by 40 percent. Under current estimates, rates would rise roughly 3 percent a year for seven years, beginning in 2006. When compounded, that totals 23 percent. The average residential customer paying $166.50 this year for water would pay $38 more by 2012. Ron Bucher, senior vice president of administration, cautions that the rate proposal is not set in stone. The utility's income varies each year, depending upon the weather. Hot summers with high water use could generate enough money to lessen the size of the increases. Conversely, cool, wet summers could increase the size. "Anything more than a year," he said, "is a stab in the dark when you're talking about projections for water utilities." In 2003, for example, the utility's managers had projected a need for a rate hike in 2005. That proposal has been dropped. Board member John McCollister said customers would be better off if the district started the increases next year rather than 2006. If that were done, he said, the initial increases could be smaller. It is also possible, he said, that the district could reduce the amount of money it needs to borrow. Under McCollister's proposal, the district would increase water rates by 2 percent annually from 2005 to 2008, and then by roughly 3 percent annually from 2009 to 2012. That would increase the average ratepayer's annual bill by $36 in 2012. Bucher said M.U.D.'s management believes the utility will have sufficient revenues in 2005 to cover operating costs. Based on next year's budget projections, the $136 million water department will end next year with $14 million left. The board will take up McCollister's proposal Dec. 17 when the members vote on the 2005 budget. The district has previously raised rates to save up money for the plant. The savings account for the plant reached a peak of about $125 million, Bucher said. By the end of next year, that account is projected to have a balance of $44.6 million. In January of this year, M.U.D. raised water rates 2.75 percent. Prior to that, the last water rate increase was in April 2001. |
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