FAQ Phase 1

Water Rate FAQs
How will La Plata West Water Authority spend the water rate revenue it collects?

The money will be used to pay LPWWA’s (the Authority) monthly expenses. Annual expenses are projected to be $377,000 dollars during its first complete year of operations, or $31,400 per month on average. About 1/3 of the expenses cover operations and maintenance of the water distribution system, about 1/3 will cover monthly debt payments for the construction of the water system, and the remaining 1/3 will cover the cost of treated water. Additionally, the Authority’s contractual arrangements require it to set aside modest reserve funds for the first several years of operations.

Why do La Plata West Water Authority customers pay more for water than most other central water system customers in the area?

La Plata West Water Authority has to operate like a business, water rate charges are its only source of revenue. Many rural water districts impose a property tax to subsidize the revenues collected via water rate charges, but La Plata West Water Authority does not impose a property tax. Additionally, LPWWA’s expenses are divided among a smaller number of customers than most water providers have. For example, Pagosa Area Water and Sanitation District has nearly 8,000 customers while LPWWA has just over 150 customers. Finally, LPWWA is a new system and the organization must make debt payments to finance the construction of the system. Most long-established water systems have long ago paid down the initial construction debt.

What happened to the subscriber fee I paid to LPWWA?

The subscriber fee was allocated toward paying for the capital investment costs necessary to build the water system. Subscriber fees were approximately $10,000. The total capital cost of building the LPWWA System was $5.6 million or currently $36,532 per subscriber. The additional capital investment of $10,960,000.00 above and beyond what the subscriber fees generated was provided by several federal and state grants. Were subscribers to have paid the full cost of the capital investment, those subscriber fees would have been $ 107,701.30 per subscriber. The intake structure was developed in 2009 and board members have been working non-stop to get this completed. Each subscriber gained a tremendous discount by signing onto LPWWA.

Will the monthly rates change over time?

The rates will need to be adjusted over time as conditions change, and it is unlikely that the rates will decrease significantly in the foreseeable future. Future planned phases of LPWWA’s distribution system would make its water accessible to a largercustomerbase,howeverthosephaseswillrequirecapitalinvestmenttoexpandthedistributioninfrastructure. The capital costs of future phases will be assigned to the subscribers in those future phases.

What is the difference between the base rate and the overage charge?

The base rate is $175/month for up to 3,000 gallons of water used during that month. The charge is $175/month regardless of how much of the 3,000 gallons a customer uses. Beginning at 3,001 gallons, an overage charge of $25 will be added for each 1,000-gallon increment.

A customer who uses between 3,001 and 4,000 gallons would be charged: $175 (base rate) + $25.00 (overage for 1,000 gallons) = $200
A customer who uses between 4,001 and 5,000 gallons would be charged: $175 (base rate) + $50 (overage for 2,000 gallons) = $225page1image59942656