Colorado Springs Utilities ratepayers could pay an average of $14 more a month for water, wastewater, natural gas and electric services next year, as outlined in the municipally-owned agency’s proposed $1.8 billion budget for 2025.
The proposed spending plan is 21% more than the approved $1.5 billion budget for 2024.
It will include recommended base rate increases — on average, by about 6.6% — for all four utilities services each year for five years, as well as a new time-of-day rate intended to reduce high demand and the need to purchase power when it is most expensive, Chief Planning and Finance Officer Tristan Gearhart told reporters Tuesday.
Regulatory requirements, system reliability needs and community growth are driving the increased costs from 2025 through 2029.
Financial executives will pitch the 2025 budget and five-year rate case to the Utilities Board of Directors, which also acts as the City Council, at its regular meeting Wednesday afternoon.
Utilities plans to add $3.7 billion in additional infrastructure over the next five years to meet requirements like the state’s commitment to reduce greenhouse gas emissions 80% by 2030; make system improvements or bring new equipment online to reliably operate the existing system; and increase capacity to support population or system growth, Gearhart said.
Capital projects make up almost 34% of the proposed 2025 spending plan.
Colorado Springs Utilities Chief Planning and Finance Officer Tristan Gearhart speaks to reporters about the agency’s proposed 2025 budget and rate case on Tuesday, Aug. 20, 2024, at the Plaza of the Rockies building in downtown Colorado Springs. (Breeanna Jent, The Gazette)
Utilities’ water capital expenses over the next five years are estimated to total about $662,160, the majority of which are tied to reliability, according to the agency’s website. This includes the Continental-Hoosier System project that will expand the Montgomery Reservoir in Park County, increasing Colorado Springs’ water supply as well as water storage on Colorado’s Western Slope.
Another massive, $396 million project will expand Utilities’ eastern wastewater system, for example, which will support continued growth on Colorado Springs’ east side. When complete, the newly expanded system will serve up to 225,000 residents.
The agency typically updates base rates once a year. However, this time it is requesting approval to set base rates for five years to pay for these and other planned capital projects, Gearhart said.
The Utilities Board will continue reassessing and adjusting costs for natural gas and electricity on a quarterly basis, he said. This compensates for increases and decreases in market prices for those services.
Colorado Springs Utilities customers typically pay less than other utilities customers along the Front Range, but Gearhart acknowledged Tuesday the anticipated impact on customers’ bills.
“We know that this is something that presses the community, but in order for us to continue to deliver the reliable and safe essential services that our customers rely on, we really believe that we need to move forward with these investments in our infrastructure,” he said.
Utilities is proposing to increase base rates by 6.5% for electric and water services, 4% for natural gas and 9% for wastewater every year from 2025 to 2029. Base rates pay for the pipes, wires and plants that provide utility services and are based on the cost of serving customers.
A sample bill included in Colorado Springs Utilities Board of Directors meeting materials for Wednesday, Aug. 21, 2024, shows the estimated impact of the agency’s proposed $1.8 billion budget for 2025 on residential, commercial and industrial users for the years 2025-2029.
A sample service bill included in Wednesday’s board meeting materials shows the average residential customer would see their utilities costs increase from about $246 a month currently to just under $260 a month, or an increase of 5.7%, starting Jan. 1.
Monthly costs increase every year, up to an average of about $326 a month by 2029 for residential customers, the sample bill shows.
Utilities will also propose a new “energy-wise,” or time-of-day rate, allowing customers to pay different rates for electricity based on the time of day it is used. It is most expensive for Utilities to deliver energy between the hours of 5-9 p.m. Mondays through Fridays, when most customers are using it, Gearhart said.
“New energy-wise rate options really give customers an opportunity where they can save on their bills if they are able to move their electric usage off of that time period,” he said.
If approved, the new energy-wise rate will go into effect in phases, beginning in October next year. The energy-wise rate will become the standard for most customers by the end of 2025. Customers can choose to opt out and instead pay a fixed seasonal rate for electricity, Gearhart said.
After Wednesday’s presentation to the Utilities Board, the City Council will hold two hearings on the budget and rate case, the first on Oct. 22 and a final vote anticipated Nov. 12.
If approved, new rate changes will go into effect Jan. 1, 2025 for base rates and Oct. 1, 2025 for energy-wise rates.