Why your water bill is going up

New rate structure still rewards conservation while helping us upgrade our system in a fluctuating climate.

August 15, 2016 | By: Travis Thompson

We’re getting a lot of questions about our new rate structure.

No surprise there. With multiple tiers of pricing, indoor and outdoor usage totals, and higher fixed charges to meet infrastructure demands and the extreme weather fluctuations of climate change, water rates are complex and often confounding.

Denver Water crews proactively install or replace an average of 60,000 feet of pipe throughout our service area per year. About $11 million will go to main replacement and main improvement in 2016 and $130 million will be invested in main replacements over the next 10 years.
Denver Water crews proactively install or replace an average of 60,000 feet of pipe throughout our service area per year. About $11 million will go to main replacement and main improvement in 2016 and $130 million will be invested in main replacements over the next 10 years.

But of all the questions, one stands above all the others.

Is my bill going up?

That’s a straightforward question, and the simple answer is yes.

Not necessarily everyone’s bill, and not by the same amounts. But yes, in general, this year’s charges were designed to help us recover our increasing costs to collect, treat and deliver safe, reliable water, while remaining affordable and encouraging responsible water use among those we serve.

For about half of our Denver residential customers, the annual increase in 2016 will be less than $39, including some who will see a decrease. In the suburbs, about half of the residential customers will see a total increase this year of $100 or less, including some customers with annual decreases.

“The reality is that the cost of water is going to increase as we continue to invest in infrastructure, new supplies, watershed protection, reuse and more,” said Denver Water CEO Jim Lochhead. “We are committed to keeping essential water use affordable and ensuring our customers are getting good value for the increasing investments they will need to make in their water system.”

Answering that question invariably leads to others, especially these three:

  1. Are your new rates punishing me for conserving water?
  2. If not, why are the biggest residential water users paying less while households using the least amount of water are paying more?
  3. Why is my bill so much higher this year than it was last year?

Let’s take them one at a time.

Question 1: Am I being punished for conserving water?

Some customers tell us they worry the new rate structure doesn’t promote conservation.

Not so. Our philosophy remains exactly the same: The more you use, the more you pay. In fact, our new three-tiered rate structure gives customers a more accurate signal of how their water use affects their bills, allowing them to make changes to conserve water.

The old rate structure, which had four tiers, did its job. Customers reduced water use by more than 20 percent in the last 15 years, despite a population increase of 15 percent.

But under the old structure, most residential customers were paying the same price per 1,000 gallons for essential indoor use as they did for outdoor use – even if they weren’t efficient about their water use.

The new structure is much more individualized, with three tiers that help distinguish indoor use from outdoor watering for a typical-sized yard, and then anything additional for those who have larger properties or are being less efficient with their water.

All customers pay the cheapest rates (Tier 1) specific to their needs for essential indoor water use, considered vital for drinking, bathing and sanitation. That rate is calculated by averaging your monthly water consumption on bills dated January, February and March each year.

When you use more water than your unique indoor average, your price per gallon jumps to Tier 2. That price signal tells you you’re using more water, most likely outdoors. We bill this at the second lowest rate so you can still afford to have a healthy landscape. (It takes about 15,000 gallons a month to water an average-sized yard efficiently.)

Water used in excess of that amount jumps to Tier 3, where you are charged the highest rate per 1,000 gallons, alerting you that you may want to cut back on water use that is more about choice than need.

In other words, those using the most still pay the most.

Question 2:  OK. So why am I hearing that bills for the highest users are going down while the lowest water users are paying more? 

There has been talk and media coverage on this point. To be clear, higher water users will always pay higher bills than lower water consumers.

And for 90 percent of our residential customers, bills for those who are higher water users will increase more than for lower water users under the new structure.

The remaining customers at either end of the spectrum are a different story and hardly represent what a typical customer looks like.

Let’s look at the lowest 5 percent of our water users. In many cases, these customers don’t ever use water in some months. They may live in a different state for part of the year, or the property could be vacant because it was abandoned or is waiting on rental tenants, among other reasons.

We raised the fixed charge on everyone’s bill by about $2 a month, which helps us stabilize our revenue throughout the year to account for more frequent extreme weather fluctuations that affect water usage.

That will raise the water bills of these customers by as much as 30 percent. But in almost all of those cases, 30 percent means less than $25 a year.

The highest 5 percent of water users are unique in their own way. Some may have had massive leaks over time, while some may fill large ponds, which creates a huge spike in water use in one month of the year. Others just own really big properties with acres of grass.

Even if they’re efficient users, the size and use of these properties translates into annual water bills totaling thousands of dollars.

Under the old structure, these customers were charged $11 in the city and more than $12 in the suburbs for every 1,000 gallons they used over 40,000 gallons (Tier 4). But less than 1 percent of city customers and less than 3 percent of suburban customers were ever billed at those rates.

With the fourth tier eliminated, the most these customers will pay per 1,000 gallons of water used is $6.24 in the city and $7.87 in the suburbs.

If these customers use water exactly as they did last year, they could see their bills drop by more than $100 this year.

These are the exceptions in the rate formula, not the norm, and they do not reflect the bills of more than 200,000 active single-family residential accounts.

The reality is that about half of Denver residential customers can expect to pay less than $350 total in 2016 for water under the new rate structure. Last year, under the old structure, the total amount paid was less than $300 annually.

Question 3: So why is my bill so much higher this year than last?

We’re not in Hawaii or San Diego, where we can set the daily weather report on repeat. In the Denver metro area, no two days, or months, are alike.

If you look back at the temperature and precipitation numbers for our summer months over the past few years, you’ll see major differences. Because weather drives outdoor water use, these changes make it more difficult to compare your current summer bills to previous summer months.

In 2015, June and July were 5 degrees cooler and brought 5 more inches of precipitation to the metro area than those same months this year. That led to an overall water consumption increase this June and July of 32 percent (about 4.3 billion gallons) compared to last year.

Based on “the more you use, the more you pay,” customers who used more water this summer will pay more than they did last summer.

To figure out why your bill is higher this year, look at the gallons used before comparing the dollar amounts. This information is displayed on a graph on your bill that charts your water use over the previous year.

Image of actual customer's water use through July
With hot, dry temperatures in June and July this year compared to last year, customers are using more water (4.3 billion gallons, in fact), which means higher water bills.

So where does this leave us?

Updating our rate structure was an exercise in balancing three different, but related needs:

  1. Stabilizing our long-term rates and revenues so we can continue to maintain and operate the water system;
  2. Continuing to encourage conservation; and
  3. Keeping essential water use affordable for our customers.

Read, “Your water bill: Different path, same goals,” to learn more about how this new structure is designed to help us meet these goals.

It wasn’t easy, and we did not make the decision overnight. We spent 18 months weighing the different impacts of this change. And we didn’t do it alone. The process included input from community leaders, as well as voices from all of our customer types and stakeholder groups, including West Slope and environmental representatives. They recommended this rate structure as the ideal way for us to continue to deliver safe, clean and affordable drinking water today and in the future.

But we also knew it was going to be confusing, so our Customer Care team is standing by to assist you. Call 303-893-2444, and a representative will help you calculate your individual bill impacts, based on your personal water use information.

10 thoughts on “Why your water bill is going up”

  1. In summer my household consumes 15,000 gallons of water which is typical for an average yard household according to Denver water (winter consumption is 5,000 gallons). Last year my July bill just for water charges (not including sewer charges) was $34.24. This July for the same usage it doubled to $68.59. Denver Water representatives, you can check it out (my account number is 4038699852). So 100% increase in a year! So do not tell me about an increase of almost 30% for higher tier customers: it is 100%. I’m not complaining about the rate; the water is a valuable resource and we have to pay for it. What I’m complaining about is the dishonesty of your communications to the general public. Shame on you, Denver Water!!!

    1. Julian,

      First, we want to assure you that we are doing everything we can to be as transparent as possible when communicating about this rate structure change, but there are some major hurdles.

      One of the biggest challenges in communicating the change is that the bill impacts will be unique for everyone depending upon how they use water. When you add the fact that this summer has been hotter and drier, resulting in additional water use, it is impossible to provide a bill impact without looking at each customer’s unique situation.

      It is important to note that even in the example you provided below, comparing one month to another month does not represent what an increase would be for an entire year. Depending upon how much water you use, and how you use it, some months will be more and some months could be less.

      That is why we encourage those with questions or concerns to call 303-893-2444 so that our Customer Care team can use your personal information to provide you with a better understanding and representation of what you can expect on your water bill and why. Our Customer Care team is happy to walk you through your bill impacts comparing 2015 and 2016 water consumption for the same month last year.

  2. Your new rate structure does not allow for people who happen to be snow birds leaving their home for months at a time during January – March. We were gone Feb 1 – Mar 31. We were automatically assigned the default of 5k gallons per month. There was no “care” from your Customer Care Team nor no logic in their explanations. We purposely did not start our outside watering until after the June 3rd billing to prove our indoor usage was higher. It didn’t matter. You are punishing those that conserve and travel.

    1. Thank you for your comment and we’re sorry your call with Customer Care didn’t meet expectations. We are doing everything we can to communicate the rate structure change as clearly as possible, but it is challenging because each bill impact is so unique to each customer.

      We understand that we have customers who don’t live in the state in the winter, and accounted for that in the new structure. For this reason, Denver Water set a minimum average winter consumption of 5,000 gallons. The minimum average winter consumption of 5,000 gallons was determined because most Denver Water residential customers use 5,000 gallons or less per month indoors, thanks to efficient water use habits and fixtures. So, even if you are not in your home during the winter, you will still receive an average winter consumption of 5,000 gallons, but will only be charged for the water you use. Throughout the rest of the year, when you are using water, the amount of water you use up to 5,000 gallons will be charged at the lowest rate per 1,000 gallons.

      We have an FAQ on our website that may help with your specific question, and any others you might have.

  3. Are there public meetings that I can attend to hear when changes are made to rates and when and where the infrastructure work is discussed? Jeff A

    ________________________________

    1. Denver Water board meetings are open to the public and generally occur at 9 a.m. on the second and fourth Wednesdays of every month. You can find more information, including location, on our website. This is where rate changes are discussed and announced, along with other important announcements. We post the agenda a few days before each meeting and we post the minutes after they have been approved – generally one or two months after the meeting.

  4. The highest water bill I paid in 2015 was $70.58 for September. In June, July & August of 2016, my bills have been $96, $96, and $102 respectively. You said: “In the suburbs, about half of the residential customers will see a total increase this year of $100 or less, including some customers with annual decreases.” In just 3 months I’ve blown by your “… total increase this year of $100 …” Now I know how the other “about half” get billed for water – it’s way more than $100 increase per year. Bring on the rain barrels – I’ll rightly keep what falls on MY PROPERTY!

  5. just another fine example of squeezing out as much as they can from people.. MORE MONEY…..MORE…. here is an idea, STOP SELLING our water to other states.. then you can find another reason to tax us MORE!!!! GREED THE NEW AMERICAN WAY…I wonder if the same ppl that run Denver water also run xcel.. seems to be a constant pattern here!!!

    1. Denver Water does not sell water to any other states. The water of the Colorado River is divided among seven states by an interstate compact, and Colorado is required under the compact to allow certain amounts of water to flow out of the state. Denver Water does not control those flows, the Colorado Division of Water Resources, Office of the State Engineer, administers all water rights in the state. Also, Denver Water runs on revenue from water rates, new tap fees and hydropower sales. We are not a tax-supported utility, and our charter prohibits operating for profit. For more information, you can visit our “Myths Versus Facts” page or read our story, Why you and your kids should care about the drought in California.

  6. lets just call it what it is, greed. someone needs more pocket money… and who better to get it from than the consumer. then say its for “upgrades” just out of curiosity.. are the states that we are selling our water too also paying higher rates??

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