Water agency budget adopted

The Southern Nevada Water Authority will charge more for delivering water in the coming year to compensate for revenue lost when the economy tanked and growth slowed to a halt.

The authority’s $557.9 million budget for the next fiscal year includes a 4.8 percent increase in the wholesale delivery charge, a fee paid by member utilities for Colorado River water.

The increase will go into effect July 1, but it is unclear whether higher water bills for valley residents will rise. It will be up to each of the water authority’s member utilities to decide whether to absorb the rate hike or pass it through to customers in some way.

The authority supplies water wholesale to the Las Vegas Valley Water District and the cities of Henderson, North Las Vegas, Boulder City and Laughlin.

The delivery charge increase is expected to generate about $5.5 million over the next year and help offset a steep decline in revenue from new customers hooking up to the system.

“The connection charges are going right through the floor,” water authority spokesman Scott Huntley said.

Authority officials expect to collect $3.2 million in connection charge revenue in 2010, by far the lowest amount since 1996. The authority received $27.8 million in connection charges last year, and a record $188.5 million during the peak of the building boom in 2006.

Water authority board members approved the new budget and the delivery charge increase on Thursday.

The total budget for the coming year is $116.8 million smaller than the $674.7 million spending plan this year.

As revenues have dried up the past two years, the authority has cut operating expenses by $50 million and deferred some $345 million worth of new construction. Much of that work involved expansions and improvements to the water system that won’t be needed without significant growth returning to the valley.

The one expensive project that cannot be put off, officials say, is the so-called third straw into Lake Mead, which will allow water to keep flowing to Las Vegas even if the reservoir drops below the level of the two existing intakes.

About 90 percent of the valley’s drinking water is drawn from the lake through those two pipes, but the reservoir’s surface could shrink below the level of one of them by 2013, the same year Intake No. 3 is slated to go online.

Roughly 75 percent of the money the authority plans to spend in the coming year will be on debt ($165.9 million) and new construction ($256.6 million).

The authority plans to spend $123.4 million on wholesale water delivery operations in the coming year, which accounts for about 22 percent of its total budget.

The delivery charge increase marks the authority’s second rate hike this year. On Jan. 1, the authority doubled its commodity charge to 20 cents per 1,000 gallons of water used, and another hike of 10 cents per 1,000 gallons set to take effect on Jan. 1, 2011.

Valley utilities have passed that rate hike directly through to customers, resulting in a roughly $1 increase in the monthly bill for the average single-family home in Las Vegas.