The Southern Nevada Water Authority (SNWA) Board of Directors on July 19, 2012 voted to issue a 50 percent credit to commercial fire-line charges that would reduce costs primarily to businesses and nonprofit entities impacted by the recently approved infrastructure charge.
Henderson, North Las Vegas and the Water District must ratify the credit before it appears on water bills. If these utilities ratify the credit at their meetings, as anticipated, it will appear on water bills beginning in September. The temporary credit would remain in effect for three years or until a newly formed citizens advisory committee recommends alternative options.
The board action was in response to local businesses and nonprofits, which have expressed concerns about the financial impacts of the infrastructure charge, particularly as it relates to fire lines. Fire-line charges are incurred only by businesses or other organizations that receive fire protection from this infrastructure, not the community as a whole. In the past, fire lines were subsidized by connection charges, which have decreased more than $180 million since 2006.
To help replace this lost revenue and repay debt service on critical water facilities, the SNWA Board in February adopted the infrastructure charge, which is based on meter size.
Revenue to fund the fire-line credit would come out of the SNWA rate stabilization fund, which was established to help offset potential future rate increases. The fund includes approximately $44 million in unanticipated revenue from enhanced bond refinancing terms and surcharge collections that began earlier than originally projected.
A 21-member Integrated Resource Planning Advisory Committee, formed by the SNWA Board in May, will review the rate structure, stabilization fund, operations and water resources, and present long-term recommendations.
The SNWA Board of Directors in February 2012 approved an infrastructure surcharge to pay for large water system projects, including a critical new intake designed to protect Southern Nevada during severe drought conditions.
The SNWA Board considered three options, and opted for the one that had the least impact on residential customers. The SNWA Board also included an amendment setting a reduced fixed-rate for fire meters at 35 percent of the infrastructure charge.
Under the option selected, the charge is based upon the customer's meter size. Typical residential customers will see a monthly increase of approximately $5, while small retail stores will pay about $36 more for water service. Large customers such as resorts, will face increases of about $2,200 per month.
The three-year, monthly increase will take effect in April.
Although the Water Authority has been able to stave off the increase for more than three years through significant expense reductions and the utilization of reserves, the board's concern about the agency's financial stability compelled the decision. Since 2006, connection charges for new customers--which fund the majority of capital projects--have plummeted from more than $188 million to as low as $3.2 million in 2010.
The three-year infrastructure charge is based on your meter size. Most residential customers have a 5/8” or 3/4” meter. Find your meter size on your monthly bill directly above the water usage chart.
Approximate Monthly Charges per Meter
|Meter Size||Residential||Non-Residential||Fire Meters|
|5/8" & 3/4"||$5||$19.05||$6.67|
The increase will help offset significant declines in connection charge revenues as well as continue to fund improvements to critical water-treatment and transmission infrastructure, including a third intake currently under construction at Lake Mead.
Prior to seeking an increase, the SNWA reduced operational costs by $56 million, including a 25 percent reduction in its workforce, restructured existing debt and deferred more than $395 million in new construction and approximately $130 million in additional expenses.
Capital construction expenditures, associated debt service and fixed costs such as power represent the largest portion - 80 to 85 percent - of the SNWA budget. Staffing accounts for only 14 percent of expenses, a far lower portion than for most public agencies.
An independent consulting firm that conducted a rate study of SNWA revenues proposed the following options:
All of the proposals retain a formula that encourages conservation and lower-use consumption.
The Water Authority maintains one of the country’s largest and most-advanced water-treatment and distribution systems. Southern Nevada rate payers - even after any of the rate options would be adopted - will continue to have water rates well below the average of most Western cities.
Copyright © 2013 Southern Nevada Water Authority