A $5.9 million loan for the smart meters was approved by council on Nov. 13, but if a water shortage is declared, Fischer says the city may have difficulty paying back that loan.
“It's very concerning. It's very dry and unseasonably warm,” she said.
Mayor Tommy Roberts says that the water utility's revenue will not be affected, and that the loan's low interest rate provides an excellent opportunity for the city to update a portion of its aging structure.
“I believe that we should be implementing and using the best technology,” Roberts said.
The city's projections estimate that the smart meters will increase revenue by about $573,000 per year through more accurate readings and reductions in meter reader
The increased revenue combined with a 25 percent forgiveness of the loan make the interest rate effectively zero, Roberts said.
“The conclusion is that it will pay for itself,” he said. “We have to recognize that we're actually only repaying 75 percent of that $5.9 million.”
The loan, Fischer says, is risky and puts the city at the mercy of increasingly dry conditions.
Farmington's water supply is stable according to the latest readings. The city keeps a three-month water supply reserve in Farmington Lake.
Capacity is close to 100 percent, Roberts said.
The city also has water storage rights at Nighthorse Lake near Durango.
In a shortage, the city would implement voluntary water use reduction, followed by mandatory water reduction if dry conditions persist, Roberts said.
“To my knowledge, we've only entered voluntary (use) during a severe drought six or seven years ago,” he said. “At that time, there was so sign of a decrease in revenue.”
There is little risk of a hike in rates because of drought conditions, Roberts said.
“We have an obligation to our citizens to use the most effective technology available,” he said. “To accomplish that goal, we have an opportunity to borrow money in very favorable terms. I don't foresee drought conditions impacting revenue.”
The city has never experienced a drought severe enough to implement a mandatory water use reduction.
Farmington, it appears, has no history in dealing with a severe drought situation.
Although Farmington's water supply is secure, water in the region is growing increasingly scarce.
The water level at Navajo Dam, New Mexico's only major reservoir on the San Juan River, is at 6,025.95 feet above sea level. If that level falls to 5,990 feet, a regional water use reduction agreement goes into effect.
“We're operating the reservoir as tight as we can,” said Ryan Christianson, chief of water management at the U.S. Bureau of Reclamation Western Colorado Area office in Durango. “We've been trying to store water, but there's been very low inflow.”
For Fischer, this winter's dismal snowpack and falling water levels at the lake are signs of parched times to come.
“To me (the loan) was a shoot-from-the-hip decision,” she said. “That's ultimately going to shoot us in the foot. If the (Navajo Dam) is that low then all the rivers are going to be horrendously low.”