Growth has stopped, but expensive water projects have not, so the Southern Nevada Water Authority will raise rates over the next two years to help bolster its construction activities.
On Jan. 1, the authority will double its commodity charge to 20 cents per 1,000 gallons of water used, then increase it by another 10 cents per 1,000 gallons on Jan. 1, 2011.
Water authority board members approved the rate hikes in a unanimous vote Thursday.
Each 10-cent increase amounts to a 3.2 percent rate hike for valley water customers.
The average single-family home served by the Las Vegas Valley Water District can expect to see its monthly water bill go up about $1 next year, said Dick Wimmer, deputy general manager for the water authority.
Over the next two years, the rate hike should generate about $42 million for the authority’s capital plan, which used to get most of its money from water connection charges paid by developers.
The authority projects connection charge revenue of $27.8 million this year and $14.7 million next year, down from a high of $188.5 million in 2006.
General Manager Pat Mulroy said that without some additional revenue, the authority risks depleting the capital reserves it uses to fund construction and pay down debt on previous projects.
And without sufficient reserves, Mulroy said, “no one’s going to sell you bonds,” especially in a credit market this skittish.
The authority board might be asked to approve a third 10-cent increase in the commodity charge if the economy has not begun to improve by 2011.
“These are not normal economic times. These are extraordinary times to say the least,” Mulroy said.
But if growth has stopped and water demand is down, why does the authority need money to expand facilities or build new ones?
It all comes back to “that one variable none of us saw coming,” Mulroy said: “The catastrophic drought on the Colorado River.”
Now the authority is in a race to complete a third straw into Lake Mead so water will keep flowing to Las Vegas even if the reservoir drops below the level of the two existing intakes.
“We have deferred everything we can defer. But we’ve still got to finish that third intake, and that’s a $500 million bill,” Wimmer said.
The authority is forging ahead with its multibillion-dollar plan to supply the valley with groundwater piped in from across eastern Nevada.
The project initially was proposed as a way to supply explosive growth in Southern Nevada. Now authority officials are calling it drought insurance for a community that gets 90 percent of its water from a shrinking Lake Mead.
The increase marks the second time the commodity charge has been raised since it was established at 5 cents per 1,000 gallons in October 1996. The charge was raised to its current rate of 10 cents in November 2005.
The Southern Nevada Water Authority is the wholesale water supplier for the Las Vegas Valley Water District and the cities of Henderson, North Las Vegas, Boulder City and Laughlin.
The member utilities are expected to hold public meetings later this year to discuss what the commodity charge increases will mean for their customers.
The rate hike does not affect Boulder City and Laughlin because neither community pays commodity charges.
Contact reporter Henry Brean at email@example.com or 702-383-0350.