Title
Introduction of Incorporated County of Los Alamos Code Ordinance No. 02-380; An Ordinance Amending the Department of Public Utilities' Water Service Rate Schedules, Chapter 40, Article III, Sections 40-171, 40-173 and 40-175, and adding new Sections 40-176, 40-177, and 40-178 to the Incorporated County of Los Alamos Code
Recommended Action
I introduce, without prejudice, Incorporated County of Los Alamos Code Ordinance No.02-380; An Ordinance Amending the Department of Public Utilities' Water Service Rate Schedules, Chapter 40, Article III, Sections 40-171, 40-173 and 40-175, and adding new Sections 40-176, 40-177, and 40-178 to the Incorporated County of Los Alamos Code
Utility Manager's Recommendation
The Utility Manager recommends that the Board of Public Utilities introduce this Code Ordinance.
Body
A ten-year forecast for the Water Utility Fund was presented as part of the FY2027 and FY2028 budget process. The forecast incorporates a series of proposed rate increases designed to generate the revenues necessary to sustain current operations and to build the cash reserves required for future infrastructure investments. The proposed rate adjustments include two consecutive 8% increases-one in FY2027 and one in FY2028-for residential, multifamily, commercial, county, and school customers. Projected potable and non-potable water sales are based on five-year averages of 760,000 Kgallons and 97,300 Kgallons, respectively.
During the rate analysis completed for the FY2027 and FY2028 budget, FY2026 sales revenue was estimated at $7.61 million, and it is projected to be around $7.58 million.
This ordinance also establishes new rates for Pajarito Mountain Service Area, irrigation, snow making, and bulk water deliveries to Los Alamos National Laboratory (LANL.)
Consumption rates for residential, multifamily, commercial, county, and school customers will increase by 8% in both FY2027 and FY2028, effective October 1, 2026, and October 1, 2027. All other rates will take effect on July 1, 2026, and July 1, 2027.
As part of this ordinance review, a new monthly service charge has been added for irrigation and non-potable water sales. The charge is set at half the potable service charge due to the seasonality of irrigation and snowmaking while recovering costs for Advance Metering Infrastructure (AMI) and billing services. Bulk water delivery rates to LANL have been updated using a newly calculated rate that incorporates debt service cash reserves and contingency cash reserves because of the number of capital loans recently issued to build a new well, and replace water production lines. This revised calculation now includes operations and maintenance costs, IDC's, administrative allocations, capital and required debt service cash reserves and contingency cash reserves. LANL purchases approximately 26% of the system’s total water production. Irrigation and snow making rates are aligned with the commercial consumption rate, and the associated service charge is set at half of the potable service charge. The Pajarito Mountain Service Area follows the same consumption and service charge structure for commercial and irrigation/snow making, with an additional energy charge of $1.50 per 1,000 gallons to account for pumping water 1,800 feet to the 250,000 water storage tank on the mountain.
The proposed rates are expected to restore the Water Fund’s cash flow to a sustainable level within the forecast period. This plan will provide adequate funding for essential repairs, replacements, and ongoing operations, while also supporting progress toward long-term cash reserve goals. Future rate increases are projected at 7% beginning in FY2029.
Citizens are welcome to attend and provide public comment regarding the proposed Water Service Rates at these scheduled meetings:
BPU Public Hearing: May 20, 2026
Council Introduction: June 9, 2026
Council Public Hearing: June 30, 2026
Alternatives
As noted above, rate increases will be necessary to support essential operations, infrastructure replacement, and the restoration of cash reserves. Without taking action, DPU would be forced to curtail maintenance and replacement activities, which would ultimately impact system reliability.
Fiscal and Staff Impact/Planned Item
The proposed increases are expected to restore our water fund to a positive gas flow in FY2029 as well as begin funding our long-term cash reserves in FY2034.
Attachments
A - Incorporated County of Los Alamos Code Ordinance No. 02-380
B - Water Rate Ordinance Presentation