February 07, 2018

VOTE TODAY: Water Utility Rate Special Election--Pouring On The Facts

The Jackson Springs Water Plant was completed in 2013 and paid for through a combination of bonds and a State Revolving Fund.  The 2008 Utility Rate Study established repayment of this bond and the SRF Loan. The Jackson Springs Water Plant was completed in 2013 and paid for through a combination of bonds and a State Revolving Fund. The 2008 Utility Rate Study established repayment of this bond and the SRF Loan. (City Photo/Darrell Shoemaker)

WHAT IS ON THE BALLOT?

A special election will be held Tuesday, February 20 for Rapid City residents to determine whether city water rates should be set by resolution and adjusted at levels recommended in the 2017 Utility Rate Study.   A 'yes' vote supports the City Council's decision in 2017 to set rates for water through a resolution and adjust rates recommended in the 2017 Utility Rate Study for 2018-2022.  A 'no' vote will prohibit rates being set by resolution and revert to ordinance keeping rates at current levels.

Prior to the 2017 Rate Study, the last study was conducted in 2008 with recommended adjustments for 2009-2013.  Rates during this time increased but the Councils at the time kept the increases lower than the levels recommended in the 2008 study.  The last adjustment was made in 2013.  There have been no utility rate adjustments since 2013.

WHAT IS THE PURPOSE OF THE UTILITY RATE STUDY?

The Utility Rate Study was developed to position the Water and Water Reclamation Divisions to meet current and future operation and maintenance expenses and capital requirements, identify proposed funding strategies for capital improvements, ensure the Water and Water Reclamation rate structures reflect the true cost of service, provide fair and equitable rates across all user classes and maintain revenue stability for the Water and Water Reclamation Division.

WATER SYSTEM INFORMATION

The City of Rapid City’s water system had 25,369 customer accounts on December 31, 2017 and is comprised of the following main components:

 Water Production

 The Water Division produced 3.96 Billion gallons of water in 2016

 The Water Division operates two dams/reservoirs (Pactola and Deerfield) in conjunction with the U.S. Bureau of Reclamation.

 The Water Division operates and maintains 2 water treatment plants, the Jackson Springs Water Treatment Plant and the Mountain View Water Treatment Plant, for treatment of water from Rapid Creek.

 The Water Division operates and maintains 12 water booster stations.

 The Water Division operates and maintains 19 water storage reservoirs (tanks).

 The Water Division operates and maintains 9 water production wells.

DID YOU KNOW?

— There are 11 water pressure zones (service areas) within the Rapid City water system.

— Water Distribution/Utility Maintenance

— The Water Division operates and maintains 511 miles of pipe in the City water system.

— The City’s water system contains 4,386 fire hydrants that are operated and maintained by the Water Division

— There are over 12,000 valves in the City’s water system that are operated and maintained by the Water Division.

— The Water Division responds to over 10,000 requests per year for water and sewer system utility locates.

RATE COMPARISONS

The City’s proposed water rates have recently been compared to water rates in other communities within South Dakota. These types of comparisons can often be misleading. No two water systems are the same. Variables such as source water availability and quality, water treatment requirements, topography (which dictates the number of pressure zones within a system), customer make-up, climate and other factors can greatly influence the cost of providing water service to a community.

For example the City of Rapid City has 11 water pressure zones within its system. This is a relatively large number of pressure zones for a community of this size. This number of pressure zones is necessary because of the variable terrain and elevations within the City. Cities with flatter terrain will have fewer pressure zones. The number of pressure zones within a system will impact the cost of operating a water system. Water must be pumped from lower to higher pressure zones (elevations). Pumps are powered by electricity. Purchase of electricity is one the main costs of operating a water system. Therefore, the more water that is pumped the higher the electrical costs incurred.

Another variable among municipal water systems is how they develop their rate structure. Some communities choose to generate larger portions of their rate revenue though one time fees or charges and less through user rates. However, most communities follow accepted defensible guidelines in development of their rate structure.

YOUR UTILITY RATES SUPPORT CAPITAL IMPROVEMENTS

Capital Improvement Projects are engineering and construction projects that replace, improve or provide new infrastructure to the City’s water and sewer systems. These projects can consist of replacement of aging water and sewer mains, replacement or improvements to booster stations, new or replacement storage reservoirs, additions or improvements to treatment facilities, or a host of other items necessary to keep the City’s water and sewer systems operational.

A system replacement or improvement that goes beyond the day to day maintenance of the system is considered a capital improvement.

The City of Rapid City Public Works Department awards 60 to 70 capital improvement project contracts a year. The majority of these projects include a water and/or sewer component. Annually the City of Rapid City expends $7,500,000 to $9,000,000 on water system capital improvements and $5,000,000 to $7,000,000 on sewer system capital improvements. Examples of recent water and sewer system capital improvements are:

  • The $28.5MM Jackson Springs Water Treatment Plant, completed in 2013, was paid for through a combination of bonds and a State Revolving Fund (SRF) Loan. The 2008 rate study established water rates for repayment of this bond and SRF Loan.
  • The new North Rapid Booster Station was completed in 2016 at a total cost of approximately $2.65MM. This project was funded through water rates.
  • The Mt. Rushmore Road reconstruction project, which is still in progress, includes approximately $2.6 MM in water system improvements and approximately $1.5MM in sewer system improvements. These improvements are funded by water and sewer rates.
  • The Jackson Boulevard reconstruction project, which was completed in 2016, included approximately $5.3MM in water system improvements and $3.6MM in sewer system improvements. These improvements were funded by water and sewer rates.
  • The Anamosa Street reconstruction project, which is still in progress, includes approximately $1.54MM in water system improvements and approximately $500,000 in sewer system improvements. These improvements are funded by water and sewer rates.
  • The approximately $1.1MM Water Reclamation Facility Process Improvements project, which is currently in progress, is funded in full by sewer rates.

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