After complaining that a new water surcharge would sink them, Las Vegas business owners got some relief last month when they were promised credits for half the bill. But now, the region’s water utility chief says rates could rise yet again — and the credits businesses were promised could be reversed.
Pat Mulroy, general manager of the Southern Nevada Water Authority, said Friday that all “rates and charges are back on the table” for consideration by the agency’s Integrated Resource Planning Advisory Committee. The 21-person committee was formed in May to help the wholesale water supplier set policy on facilities, funding and other issues.
Mulroy said water authority officials will revisit the newly added surcharges and seek alternatives but predicted that no matter what is decided, people will likely be upset.
“There’s going to be somebody who’s going to scream,” said Mulroy, who made the comments during a panel discussion Friday at a real estate conference presented by the Commercial Alliance Las Vegas at the Gold Coast.
Mulroy said afterward the agency is carrying more than $3 billion in debt and must keep at least $280 million of capital in reserves to prevent its credit rating from “going in the toilet.” She said the committee can recommend eliminating last month’s credit as long as the agency maintains its reserves.
Much of the agency's debt is related to the $800 million third intake pipeline being built into Lake Mead.
Despite its unpopularity, the surcharge is now a critical piece of the agency’s finances. It accounts for a third of the authority’s revenue this year, and Mulroy said it’s needed to help pay for water services that previously were provided for free.
"This is a question for the community: Who pays?" she asked.
The authority’s board of directors approved the surcharge in February to help finance large water-system projects. The three-year monthly increase took effect in April.
The charge is based on customers’ meter size. The authority said residential customers would face a monthly increase of about $5, small retailers $36 and larger customers, such as casinos, about $2,200.
The water authority said it averted the increase for more than three years by cutting costs and tapping its financial reserves but eventually had to institute it because new customer connection charges, which finance most capital projects, plunged from $188 million in 2006 to $11 million last year. They had dropped to $3.2 million in 2010.
Nevertheless, the surcharge was met with widespread outcry, particularly from local businesses. Some companies saw monthly bills jump as much as 300 percent, and many said the hike would put them out of business.
The bulk of the complaints came from small-business owners, who were put on the hook to a surcharge for fire lines, a previously free service. While rarely used, fire lines provide added water pressure in case of a fire.
In July, the water authority approved a 50 percent credit for commercial fire line charges to reduce the costs for businesses and nonprofit groups. It also said the credit would remain in effect for three years or until a newly-formed citizens advisory committee recommended alternatives.
After that approval, the Las Vegas Valley Water District — one of seven districts that buys water from the Southern Nevada Water Authority — ratified the credit last month, granting $44 million of relief to commercial property owners. Those businesses were expected to start receiving the credit this month.