Opponents lining up against proposed water authority rate hike

By Joe Schoenmann

Wednesday, Feb. 22, 2012 | 3:04 p.m.

A week before a vote on a proposed water rate increase, the Southern Nevada Water Authority is facing efforts on several fronts to derail and/or alter its plan.

The Las Vegas Chamber of Commerce, typically an ally of the water authority, sent an email to its members today, saying it opposes the authority’s rate-increase proposals, which are aimed at paying off debt on the unfinished $800 million-plus “third straw” into Lake Mead.

While the chamber supports adding a flat surcharge to bills, as the water authority recommends, it argues that the proposed residential charge is not high enough, placing an unfair burden on businesses. If the monthly $5 residential charge is adopted, small businesses will see their water bills rise by 50 percent to 300 percent.

To lessen the burden on business, the chamber recommends the flat residential charge be set at $9.98.

“We aren’t arguing that this (rate increase) isn’t important. We all have a stake in water reliability,” said Cara Roberts, a spokeswoman for the Chamber of Commerce. “But we need to do this in a way that isn’t going to create such a shock to small businesses.”

Along with the chamber, Americans for Prosperity, a conservative political group, has been robo-calling water customers with a “tax alert” deriding the water rate proposals and criticizing the water authority’s spending.

“The Southern Nevada Water Authority continues to waste taxpayer money on frivolous ads, and now wants to reach into the pockets of citizens even more, working to increase water bills at a minimum of 27 percent,” Adam Stryker, the group’s Nevada director, said in a statement.

The water authority has taken pains to state its case. Even though lake levels have risen over the last year, more than a decade of drought has prompted construction of a third pipeline into Lake Mead out of fear the lake level would fall so low that existing intakes would end up sucking air, not water.

At the same time the lake was dying up, so was the water authority’s main revenue source. The public entity collected $188 million in connection fees in 2005-06, as the overheated construction boom was in full swing. Connection fees are generated by new development. Last year, that revenue fell to about $11 million.

So the water authority paid for a study last year and is proposing three options to pay off the debt on the third pipeline and other projects that bring its outstanding debt to some $3.3 billion. The rate proposals look like this:

• 1. A hike that ties into usage by increasing the charge per 1,000 gallons of water by 30 cents to $1.06. A typical residential bill would increase about $10.

• 2. A flat monthly rate increase of $5 for residential customers, $36 for retail and $2,200 for resorts. The charge would be imposed for three years.

• 3. A combination of the first two options, which would cost $5.65 for most homes, $31 for retail stores and $3,850 for resorts.

Roberts said the chamber wants to see the flat-rate proposal modified. Instead of $5, make it $9.98 for residential water users, who make up the vast majority of water consumers.

Here’s how the difference would lower the cost with one sample, small business:

• With a 1-inch regular water meter and a 6-inch required fire meter, that business’ bill would increase $324 under the flat-rate option, while residential customers only pay $5 more a month. The average residential bill would increase from $37 to $42.

• With a $9.98 flat residential rate, that same business’ bill would increase by $182 ($142 less than under the water authority’s flat-rate plan). And the average residential bill would increase from $37 to $47.

At least one water authority board member is also considering modifications to the surcharge proposals, though not to the extent the chamber is proposing. Clark County Commissioner Steve Sisolak, one of three commissioners on the water authority board, said the problem with the flat rate, be it $5 or $10, is that it only lasts for three years. Then it would increase a dollar per year for the next few years. After that, if development and connection fees haven’t increased, more increases could be on the table.

Sisolak believes a $6 per month flat-rate for residential users, and that it be left in place for more than three years, is the way to go. “I want more stability in the rates,” he said.

Like Americans for Prosperity, Sisolak has said that he too would like to see the Water Authority cut its budget as a “good faith” measure.