Even during July’s record-setting heat wave, Denver Water’s 1.1 million customers used 12 percent less water than they did five years ago – underscoring the utility’s revenue problems.
Water consumption and revenue dropped in 2000 as a five-year drought began. Now, even with the drought over and July high temperatures averaging 94.5 degrees, customers have continued to tighten taps.
Denver Water customers consumed 11.4 billion gallons of water last month. During July 2000, when temperatures were cooler, customers used about 12.9 billion gallons.
Water use is 20 percent below historic normal demand, according to the utility.
Utility managers say they still aren’t sure why customers are using less water, especially after the Denver Board of Water Commissioners relaxed watering restrictions this summer for the first time in three years.
The dwindling demand for water is driving the Denver Water Board to consider rate increases to compensate for lost revenue.
In mid-September, the board will be asked to adopt an 8-percent rate increase for 2006, an action that has been in planning stages for more than a year.
When utility financial planners were looking at the rate increase last year, they expected that an 8-percent increase would help generate about $14 million, based on expected water use.
Today, with declining water use, the rate hike is expected to generate about $12 million.
David LaFrance, Denver Water’s finance director, said the utility should be able to cover the shortfall by delaying capital- improvement projects.
Still, the board should look at water-use estimates for 2006 and consider accelerating other planned rate hikes, he said. The current long-range financial plan calls for 8-percent rate increases through 2009.
The declining demand and revenue shortfalls are creating “a whole new world of providing water service,” LaFrance said.
At its September meeting, the board will also consider changing the utility’s residential rate structure, which divides customers into three “blocks.” The utility staff is proposing adding a fourth block, which may target high-volume water users.
Bart Miller, water program director for the Boulder-based Western Resource Advocates, said he hopes the board adopts a rate structure that charges more to those who waste water than to those who conserve.
“They should make it steep enough that it sends a price signal to the customers,” Miller said.
Staff writer Kim McGuire can be reached at 303-820-1240 or kmcguire@denverpost.com.
