Aztec grapples with utility rate increases
The city of Aztec may raise sewer rates by 60 percent this year and 35 percent next year to pay off debt
- Aztec could raise sewer rates to pay loans used to build a treatment plant and sewer outfall line
- Water and electric rates will likely also increase over the next five years
AZTEC — Aztec residents could see a 60 percent increase in sewer rates this year followed by a 35 percent increase the next year, according to the first phase of the city's utility rate study.
The first phase looked at the three utilities — water, wastewater and electric — and what expenses these utilities will face in coming years. After evaluating what types of increases the city would need to make to keep each utility self-sufficient and economically viable over the next five years, the city has now moved into phase two of the study. During phase two, city staff will determine how to implement rate increases. The city hired Raftelis Financial Consultants, Inc. to do the rate study.
No final decisions have been made.
In order to make the city's loan payments, consultants are suggesting large rate increases for sewer. Aztec installed a new wastewater treatment plant in 2010 using an $11 million loan. It is currently using a nearly $5 million loan to build a sewer line that will transport all of the city's waste to the treatment plant starting near the New Mexico Highway 516 bridge over the Animas River.
After the first two large increases, the consultants say there will not be subsequent big increases in the near future.
"Once we get things stabilized, it's mainly inflation based," said Andrew Rheem, a Raftelis manager, during a Tuesday night city commission meeting.
He said the city is currently dipping into reserves to pay debt service and relying on the other utilities to prop it up.
Aztec City Manager Joshua Ray said the electric utility has been subsidizing the other two utilities over the past few years. While the city could ultimately choose to continue using revenue from the electric utility to support the other two utilities, Aztec will need to build a substation and transmission lines in the upcoming years.
After doing some math, Commissioner Sherri Sipe said the average city customer could see an increase of nearly $64 over five years. The wastewater rate increases come on top of a 9 percent yearly rate increase for water over a five-year period starting this year, and a 1 percent increase planned for in fiscal year 2019 followed by 2 percent increases each year after that for three years.
The sewer rates are calculated based on average winter water use. The average Aztec household uses 4,000 gallons of water during the winter, according to Delain George, Aztec's utility director.
Currently, the average household pays $36.90 a month for sewer service. If the city chooses to implement a 60 percent increase this year, the average bill would increase to $58.40. The 35 percent increase the next year would raise that to $78.84. By fiscal year 2022, the average household could be paying $87.42 a month.
In contrast, the typical water customer uses 5,000 gallons a month averaged over a year. The typical customer pays $32.20 monthly for water. By 2022, the customer would be paying $49.54 if the city implements the proposed rate increases. The water utility is currently debt free, but the increases in rates are needed to pay for three upcoming projects. These projects include dredging two of the cities three reservoirs, and a treated water storage expansion project. The expansion project is estimated to cost $1.1 million while dredging the reservoirs will cost an estimated $3.2 million.
"I pay more for what I'm flushing than what I'm bringing in," said Commissioner Austin Randall.
Hannah Grover covers government for The Daily Times. She can be reached at 505-564-4652.
Proposed rate increases from fiscal year 2017 to fiscal year 2022
Monthly water rates for 5,000 gallons
Monthly wastewater rates for 4,000 gallons
Monthly electric rates for 548 kilowatt hours