‘Whenever there is a rate increase, our engineers tell us you can expect a 3 to 5 percent drop in demand’ — John Hier (Rifle City Manager)


From the Rifle Citizen Telegram (Nelson Harvey):

The project, which has been under discussion for more than six years, is motivated by the fact that the city’s Graham Mesa Water Treatment Plant is 32 years old and near the end of its useful life. The plant, city officials argue, can’t support Rifle’s growing population, or meet potential new federal water quality standards. Yet in opposing the project, [John Steele] has claimed the rate increases required to fund it would lead to a drastic drop in water demand, depriving the city of the revenue it needs to finance its loan.

Under the rate structure approved by City Council to fund the plant, water rates would rise by about 64 percent for those using up to 2,000 gallons a month, and roughly 99 percent for those using up to 4,000 gallons. Rate increases would be higher if voters do not approve a half cent sales tax increase to help fund the project. “No one has told me whether they can cover the loan with a 20 percent drop in water consumption,” said Steele, which he said could result from the rate hikes…

But City Manager John Hier, who helped design the new rate structure, said there is no way to tell how much demand would drop in response to higher water rates. His plan, he said, accounted for the fact that higher prices would prompt some consumers to use less water. “Whenever there is a rate increase, our engineers tell us you can expect a 3 to 5 percent drop in demand,” he said. “Of course, that depends on how large the increase is, but we were conservative in estimating the rates that would generate enough money to fund the new plant.” Hier said he didn’t know how much consumption would have to drop before the city would be unable to repay its loan.

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