Carson City water revenues 10 percent below projections
Carson City next year may consider raising water rates again if a drop in water consumption continues to slash revenues.
Revenues from rates for fiscal year 2015-2016 are coming in 10 percent or $1.4 million below projections, due in part to voluntary conservation during the drought.
If the trend continues, the city would have to significantly pare back spending on water infrastructure capital improvement projects, David Bruketta, Carson City utility manager, told the Utility Financial Oversight Committee Tuesday.
“In six years, that would mean $8.4 million less revenue,” he said.
The department’s capital improvement plan for 2016-2017 is $3.6 million and includes work on the transmission main, well re-drilling and pump replacements.
Bruketta said he hoped the current wet winter would reverse the tide, encouraging people to consume again, and suggested the city wait another year to see if it needed to reevaluate rates.
“You’re selling a commodity and you’ve asked people to buy less of that commodity. So if you’re relying on a rate by gallon, we have to do something about how we’re charging,” Committee Member Mike Bennett said. “I don’t think a year makes a trend, but this is really scary in my opinion.”
Darren Schulz, public works director, said the situation isn’t dire and rates are going up faster than people are cutting back.
“It is better than years ago, it’s just that the margin isn’t as much as we predicted,” Schulz said. “It’s not causing problems that are keeping us up at night.”
The coming fiscal year is the fourth year in a five-year phase-in of new water rates approved by the city supervisors in 2013 to fund infrastructure improvements.
The rates now comprise a flat rate and a volume rate for water consumed above the amount covered by the base rate with the goal of providing stable rates to budget around.
But the ongoing drought, and possibly the jump in rates, incentivize residents to conserve, cutting revenues.
The utility department also explained why the drop in revenues meant it could not meet certain financial policy goals set out by the city.
The financial policies were laid out in 2013 to stabilize reserve funds, but they’re not binding.
The committee was created at the same time to make recommendations to the Board of Supervisors regarding compliance with the policies. The committee voted to recommend the department’s 2016-2017 water, sewer and storm water budgets to the board.