Title
Discussion of Wastewater Fund Status, Rate and Future Capital Needs
Recommended Action
Discussion item only, no recommended motion.
Staff Recommendation
Staff recommends delaying construction of the White Rock Wastewater Treatment Plant replacement project until 2020, and implementing wastewater rate increases as discussed.
Body
Background
The flow of wastewater into our treatment plants has been steadily decreasing over at least the past ten years. (See attached graph of wastewater inflows into the LA and WR plants.) As this has occurred, the old original plants the County inherited from the Atomic Energy Commission have reached, and passed, their design life. The County borrowed $12 million from the New Mexico State Revolving Loan Fund to construct the Los Alamos Wastewater Treatment Plant. Repayment of that loan began in FY09 and added almost $1 million per year debt service payments to the wastewater budget. Traditionally, the wastewater rate was based on the winter water use average of customers. This approach had several problems, including overall low winter water use due to the unusually high number of people who travel out of the county during the winter months. A 24% adjustment factor was utilized in an attempt to match the low winter water use data to the actual flows entering the plant. Revenue still lagged expenses however, and in 2011 it was decided to change to a flat rate for residential users, and to raise the rate by a series of five 8% annual increases. The last of those increases took effect in July of 2016.
In examining the income statement of the wastewater utility it is apparent that revenues have still not kept up with declining sales and the utility is barely financially solvent. At the present income level, the utility can function, but is not accumulating money to bring reserves up to the amount called for in the DPU financial guidelines adopted by the Board. When payments on the estimated $14 million loan that wi...
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