There’s a rift between the town of Ignacio and the Southern Ute Utilities Division over water rates.
The utility run by the Southern Ute Indian Tribe plans to charge the town 74% more to supply its residents with water beginning in six months, while the town’s manager expected rates to actually decrease after the tribe performed a rate analysis recently.
The tribe owns the treatment facilities to treat both waste and potable water, which the town buys and then provides to Ignacio residents and businesses. Most municipalities have their own treatment facilities, but in Ignacio’s case, the town acts as the middle man. The town charges residents the same rate they pay the tribe plus an additional fee to pay for maintenance, distribution and collection services.
SUUD has been operating at a deficit and needs to increase rates, including for tribal members, to continue to provide services, said Tribal Council Affairs Communications Specialist Lindsay Box in an email. Ignacio Town Manager Mark Garcia thinks the town is being significantly overcharged.
The town had repeatedly urged the SUUD to perform a rate analysis to justify what it considered to be high rates. Ignacio officials assumed the analysis would result in lower rates, but the opposite happened.
The two entities are currently discussing new rates, which would occur Oct. 1, the start of the tribe’s fiscal year. The proposed rates are markedly higher than current rates and are contingent on Tribal Council’s approval.
Water ratesThe tribe proposed a five-year contract and estimated rate increases over the next three years in a memo given to the town in early March. Current monthly rates are $24.60 per household or business for 6,000 gallons. The current proposal from the tribe is to charge $42.80 per 6,000 gallons on Oct. 1 – a whopping 74% increase. By 2023, the tribe is proposing $62.80, a total increase of 155% over current rates.
Garcia said the town also recently completed an analysis of its operations, maintenance and capital costs and determined that residents need to pay an extra $1.88 a month over current rates – 6.4% more than the current $24.60 to maintain and operate their services.
Wastewater ratesThe potential wastewater changes are somewhat confusing because the tribe and town agreed to change the billing system starting Oct. 1. Currently, residents and businesses are charged per ERT, or Equivalent Residential Tap, per month. One ERT allows for 7,500 gallons of usage.
Wastewater currently costs $75.40 per ERT per month, $65.52 for the tribe plus a $9.88 base rate to the town for billing, repairs and collections. This totals just over $900 per year for a household with one ERT.
“(Wastewater rates) are astronomical compared to other municipalities,” Garcia said. Ignacio pays some of the highest wastewater rates in the region, although they’re nearly $20 less a month than Durango residents pay.
Garcia said the average town customer uses approximately 4,000 gallons per month, so many are overpaying for what they actually use. The outdated ERT billing system is particularly expensive for businesses that have low water usage and multiple ERTs.
The ERT billing system will shift to a base charge plus usage system on Oct. 1. The usage system takes the average winter usage from December, January and February to get an average amount of usage throughout the year. The proposed rate on the usage system is $82.09 per 6,000 gallons, which would rise to $102.09 per 6,000 gallons in 2023.
Box said in 2014, a contractual rate increase was not implemented because the town added the $9.88 fee. Similarly, Garcia said the town has not raised its fees sufficiently because the tribe’s rates are so high. He said the town’s wastewater reserve fund is depleted and it has had to borrow from other utilities. The water reserve fund is also running low.
Looking forwardSUUD’s current annual expenses are $1.05 million for water and approximately $960,000 for wastewater treatment, according to the memo.
“The tribe has invested, and continues to invest, substantial sums in providing the community, including the town of Ignacio, with quality water and sewer services,” Box said.
“Many of the residents of the town are tribal members. ... It is important that every individual pay a reasonable rate to maintain those services.”
Box said the analysis used to determine new rates is confidential, and the tribe will not share it with the general public.
The town is considering building its own treatment plant and is currently studying the feasibility. There is not a definitive date when and if construction could occur.
Garcia said the issue will probably create a bigger rift between the tribe and the town.