BERTHOUD – Northern Water’s proposal to dramatically increase water rates, the largest dollar increase in the public water district’s 77-year history, reflects the ever-rising price of the resource on the Front Range and the agency’s struggle to maintain its sprawling, cash-strapped system.

Under current projections, rates for Colorado-Big Thompson Project water could rise from $28 to more than $100 per unit for municipal users and from $10 to $80 per unit for agricultural users by 2023, according to documents from the Northern Colorado Water Conservancy District.

Established in 1937, Northern Water operates the federal Colorado-Big Thompson Project, which diverts water from the Colorado River Basin on the Western Slope to the South Platte River Basin through a system of reservoirs and tunnels. The agency, the largest wholesale water provider in Colorado, delivers an average of 215,000 acre feet of water annually for municipal, agricultural and industrial uses in Boulder, Broomfield, Larimer, Weld and four other Colorado counties. It provides service to 860,000 people on the Northern Front Range.

The extra money is needed because Northern Water’s expenses have outpaced its revenue in three of the last four years. Property taxes, which have remained flat since the recession, make up more than half of Northern Water’s revenue, while water-rate revenue accounts for about 20 percent of its funding.

The agency has coped, up until now, by drawing from cash reserves to fund its operations. Reserve funds are partly intended to help stabilize revenue but are not a sustainable funding approach in the long term, according to Northern Water.

The agency’s board is expected to decide on short-term rate hikes through 2018 this month. These potential hikes to $52.70 for municipal users and $32.20 for irrigation users would represent the largest dollar increase in Northern Water’s history, although the district has seen similar, double-digit percentage increases in the past.

“In the early 1980s, there were several years with double-digit increases, similar to what we are looking at now,” Northern Water spokesman Brian Werner said.

The rate hikes are essential to maintain infrastructure, according to Northern Water, and experts believe they will lead to additional water conservation. But the higher prices will put pressure on farmers.

LaSalle farmer Harry Strohauer, who grows potatoes, onions, wheat and hay, rents Colorado-Big Thompson water for $1,200 per acre foot. The rate-assessment increases could elevate his costs, he said.

“It’s a snowball effect,” Strohauer said. “As the demand increases and the water (price) goes up, it’s beyond what agriculture can do. The reality is, water is going to get priced outside of agriculture.”

Northern’s customers receive water under two types of contracts: fixed and open rate. The new rate hikes apply to those customers who buy open-rate water. In June, Northern Water board members raised the open-rate assessment 9 percent for next year. The 2015 rate for cities will increase to $30.50 per unit while the agricultural rate will rise to $10.90 per unit. Fixed-rate assessments based on decades-old contracts will remain $1.50 per acre foot.

Roughly two-thirds of Northern’s water is delivered via open-rate contracts, while one-third is governed by fixed-rate agreements.

Drew Beckwith, water policy manager for Boulder-based environmental group Western Resource Advocates, said that studies show higher water prices lead to additional water conservation in the long term. Once water prices increase, he said, people may not immediately lower their consumption, but they eventually will take steps to do so, such as installing more efficient toilets and showerheads.

“For those customers, if the cities or water providers do increase their water rates at the customer level, then yes, per-capita water use is going to decrease,” Beckwith said.

Northern Water isn’t the only water district that has had to raise water rates. The Greeley-based Central Colorado Water Conservancy District, which supplies water to areas of Weld, Adams and Morgan counties, also has passed rate-assessment increases in recent years and plans to meet this month to consider additional rate hikes.

“Our organization is looking at future (operations and maintenance costs) and how do we keep our finances up,” Central Water Executive Director Randy Ray said. “You’ve got regular operations costs like labor, electricity and gasoline for vehicles. Then you also have deferred maintenance.”

The rate increases come as the nation faces challenges from deteriorating water infrastructure, which will cost more than $1 trillion over the next 25 years to fix in order to maintain current water service levels, according to a report from the American Society of Civil Engineers. Customers will pick up the tab mostly through higher water bills.

Similarly, users of Colorado-Big Thompson Project water will pay higher water bills as a result of the increased rate assessments. Increased revenue from the assessments will help fund Northern Water’s operations and maintenance budget, which accounts for almost half of the water district’s expenses. Northern Water says it needs to make major upgrades to water delivery infrastructure, much of which was built more than 60 years ago.

Tom Cech, director of One World One Water Center at Metropolitan State University of Denver, said higher expenses and a rising population have pressured water supplies, leading to elevated costs. He noted, however, that investments in water infrastructure are critical to maintaining water delivery systems.

“Look at all the investments that water providers did 100 years ago in our water system: new reservoirs, delivery systems and so forth,” he said. “That’s just the process of keeping up with the costs and population growth.”


Steve Lynn can be reached at 970-232-3147, 303-630-1968 or slynn@bizwestmedia.com. Follow him on Twitter at @SteveLynnBW.