By VERNON ROBISON
The Progress
The Virgin Valley Water District Board (VVWD) took the next step in the process toward a general rate increase at a meeting held Tuesday, Dec. 1.
The board voted to approve a Business Impact Statement (BIS), part of the ratemaking process required by law. The statement, prepared by district staff, concluded that the proposed increases would impose no direct or significant economic burden on area businesses, nor would they restrict the formation, operation or expansion of businesses.
According to the proposed increase, both the monthly base rates and the block usage rates would take a 2.5 percent step-up effective in July 2021, the start of the 2022 fiscal year.
Additional 2.5 percent increases would take place at the start of each of the 2023 and the 2024 fiscal years, according to the proposal.
In his presentation to the boards, VVWD General Manager Kevin Brown said that the rate increases were needed to cover the costs of a wide variety of needs including the cost of power for pump stations and treatment plants, maintenance, repair, line breaks, booster pumps, district vehicles, buildings, equipment, staff salaries and benefits packages and more.
“I just want to get that out in the record that there are a lot of things that our rates have to cover,” Brown said.
The rate increase is expected to bring added revenues to the district of $230,000 in fiscal year 2022, $240,929 in 2023 and $252,378 in 2023.
The BIS gave an estimated projection of the impact that the rate increase would have on the average residential customer bill.
In the first year, the monthly bill was estimated to increase by 97 cents per month, for a customer with monthly usage of 8,000 gallons per month (typical for residences in winter months); and by about $1.33 per month for 14,000 gallons per month in usage (typical for residential summer use).
In the second year, the monthly debt surcharge rate is projected to go down from the current $8.30 monthly to only $7.20. This would virtually nullify the effects of the 2.5 percent increase on the average residential customer in the second year. For the 8,000 gallon/mo. user, the bill would decrease by 11 cents per month. For the 14,000 gallon user, it would increase by only 31 cents per month.
The third year would see a $1.04 per month increase at the 8,000 gallon usage band; and a $1.46 per month increase for the 14,000 gallon usage band.
The monthly bills of larger commercial and industrial users would see a larger dollar increase. But of the 400 businesses which were sent notices of the BIS, only one responded back with a comment.
Rees’s Enterprises, a gravel pit located in Bunkerville, uses multiple larger-scale water meters in its operations including 1-1/2” meter, a 2” meter and a construction hydrant meter.
Rees’s response letter calculated that the business would see $6,500 in increases each year in water costs because of the proposed rate hike.
“Most of our products are hauled to St. George and Las Vegas,” the letter from Rees’s stated. “This leaves us with a competitive disadvantage with our competitors that are located at or nearby those locations since their haul costs are much lower. The proposed increase certainly puts an increased strain on our ability to compete for the current business and future expansion of the business.”
In response to this, Brown noted that the annual water cost for Rees’s with VVWD was at around $240,000. “So again, that puts their percentage at only about 2.5 percent,” Brown said.
Taking that into consideration, and with no other responses to the BIS, staff made the determination that no significant impacts had been found, Brown said.
During board discussion, Board Member Ben Davis said that a look at the history of rate increases in the past 20 years at the district shows how much the VVWD had stabilized its ratemaking procedures. The district’s past is marked by years without increases followed by the sudden need to catch up by instituting huge rate hikes.
“It is a really good illustration of just how far we have come as a district in planning rates,” Davis said. “I’m much more comfortable being a board member instituting moderate increases in the manner which we are doing it now, compared to what’s been done in the past.”
Board member John Burrows said that he was also in favor of the measured approach. He contrasted it with other water purveyors in the region which try to impose conservation measures by hiking water rates drastically.
“I think that we have always tried to find the happy medium of supplying water at a reasonable rate,” Burrows said. “And I don’t think we have gotten to the point where we want to double the rate so that we can cut the usage in half.”
Board member Travis Anderson said that the VVWD had avoided that type of thinking through instituting its tiered system. The usage tiers charges a lower rate in the lower usage bands. But the rate increases as higher usage pushes the customer into higher bands.
“We are getting a good return by having the tiered pricing system,” Amderson said. “It forces customers to pay more when they’re using more instead of the usual thinking where if you’re buying in bulk you get a better price. It is the opposite of that.”
Burrows made a motion to approve the BIS. It was accepted with a unanimous vote.
The board will hold a final public hearing on the proposed rate increase at its Dec. 15 meeting. It is expected that the board will take final action that night immediately following the public hearing.
