All,
As a reminder, the next SNWA connection fee increase is slated to go into effect on March 1, 2022. As stated by LVVWD staff at our January Community Planning and Infrastructure Committee meeting mentioned, please ensure you are communicating with LVVWD staff on those plans that are almost ready or already submitted but not yet approved to be subject to current rates and not the increased rates.
The full industry notice from September 2020 is outlined below and attached here.
TO: Southern Nevada Business Owners and Operators
RE: Proposed Changes to Regional Water Rates
As a wholesale water provider, the Southern Nevada Water Authority (SNWA) is responsible for water treatment and delivery, acquiring and managing long-term water resources for Southern Nevada, and implementing regional water conservation initiatives. Collectively, SNWA member agencies serve more than 2.2 million residents in Southern Nevada.
In October 2019, the SNWA Board of Directors established the Integrated Resource Planning Advisory Committee 2020 (IRPAC 2020) to evaluate and make recommendations on issues of critical interest to the organization’s long-term planning efforts. The committee is comprised of 11 stakeholders representing a broad spectrum of community interests including business, gaming, development, conservation, and residents.
At its August 26 meeting, the committee finalized 22 recommendations to be presented to the SNWA Board of Directors. These recommendations help to develop a framework through which the SNWA can comprehensively support mission-critical efforts in the future, including new infrastructure needed to maintain reliable water systems. The full recommendations report can be viewed at snwa.com. The SNWA Board will consider the recommendations report on September 17, 2020.
Recommendations included inflationary-based rate increases to SNWA charges to fund a proposed amendment to SNWA’s Major Construction and Capital Plan (MCCP) for infrastructure, water resources and water conservation initiatives. SNWA water charges fund regional infrastructure and are found on all water bills, regardless of water service provider. While they are collected by SNWA purveyor members (City of Henderson, City of North Las Vegas and Las Vegas Valley Water District), they are directly passed through to SNWA. These revenues are collected by member agencies and are used exclusively to fund SNWA projects. If approved, the typical residential customer bill will see an increase of 75 cents.
As part of the rate review process, a Business Impact Statement (BIS) must be prepared to evaluate the effect of the increased rates and charges on businesses. The SNWA Board of Directors will consider the BIS at its regular meeting scheduled for October 15, 2020 and increases to water rates at a public hearing on November 19, 2020. The proposed rate increases are attached.
TENTATIVE SCHEDULE
September 17, 2020 SNWA Board Considers Recommendations Report
October 15, 2020 SNWA Board Considers Business Impact Statement
November 19, 2020 SNWA Board holds a Public Hearing on Rates
The SNWA Board of Directors is considering increasing rates to the following effect:
- Implement a six-year annual increase to SNWA charges to:
- Phase-in inflationary catch-up, and
- Adjust for subsequent annual inflation within the six-year period:
- Increase the SNWA Connection Charge by 9.5% annually for six years, effective March 2022
- Increase the SNWA Infrastructure Charge by 4.6% annually for six years, effective January 2022
- Increase the SNWA Commodity Charge by 4.8% annually for six years, effective January 2022
- Implement an indexed rate component to the SNWA Infrastructure and Commodity charges annually, effective January 2028, and limit future increases to a floor of 1.5% and a ceiling of 4.5% each year.
- Infrastructure Charge adjusted in accordance with Engineering News Record (ENR) index
- Commodity Charge adjusted in accordance with the Consumer Price Index (CPI)
- Implement an indexed rate component to the SNWA Connection Charge annually in accordance with the ENR index, effective March 2028.
The SNWA Commodity Charge and Infrastructure Charge have not increased since they were last adjusted in 2017 and 2018, respectively. As a result, neither have kept pace with inflation. The SNWA Connection Charge has not been adjusted for more than 10 years and inflation has increased significantly since that time.
Please also note that a public hearing scheduled for February 17th will increase these rates again, due to inflation. This second notice by SNWA staff is outlined below and attached here.
NOTICE OF PROPOSED CHANGES TO
SOUTHERN NEVADA WATER AUTHORITY WATER RATES
In September 2020, the SNWA Board of Directors adopted 22 recommendations that were developed and submitted by the Integrated Resources Planning Advisory Committee 2020 (IRPAC 2020). These recommendations helped to develop a framework through which the SNWA could comprehensively support mission-critical efforts in the future, including new infrastructure needed to maintain reliable water systems.
The recommendations included inflationary-based rate increases to SNWA charges to fund a proposed amendment totaling $3.5 billion to SNWA’s Major Construction and Capital Plan (MCCP) for infrastructure, facilities, water resources and water conservation initiatives. Based on average inflation rates over the previous 25 years, the approved rate increases assumed the following annual inflation rates for years 2022-2027:
SNWA Connection Charge, based on Engineering News Record (ENR): 3.0%
SNWA Commodity Charge, based on Consumer Price Index (CPI): 2.5%
SNWA Infrastructure Charge, based on ENR: 3.0%
In the one year since the recommendations were approved, the ENR and CPI have increased by 8.4 percent and 5.0 percent, respectively—significantly more than originally projected. Consequently, the gap between the IRPAC-approved inflation rates and actual inflation rates could result in a revenue shortfall of nearly $152 million over the next 10 years.
In response, IRPAC reconvened in December to discuss and recommend a funding strategy to maintain pace with current and future inflation rates. Based on IRPAC’s recommendation, the SNWA Board of Directors is considering increasing rates to the following effect:
- Effective March 1, 2022, maintain the previously-approved inflationary catch-up rate through 2027, and update the previously-approved annual inflation rate with September 2021’s actual rates, which would, if implemented:
- Increase the 2022 approved Connection Charge by 5.4%
- Increase the 2022 approved Infrastructure Charge by 2.5%
- Increase the 2022 approved Commodity Charge by 5.4%
- Implement an indexed rate component to the SNWA Infrastructure Charge and Connection Charge (in accordance with the Engineering News Record) and Commodity Charge (in accordance with the Consumer Price Index) annually effective January 2023
- Limit future increases to the SNWA Infrastructure and Commodity Charges to a floor of 1.5% and a ceiling of 7.0% each year
These changes will affect only specific charges on a customer water bill. If approved, water users would see their total water bills increase by approximately 0.5 – 2 percent; higher water users will see their water bill increase more than a modest water user. The proposed rates are attached to this e-mail.
As part of the rate review process, a Business Impact Statement (BIS) must be prepared to evaluate the effect of the increased rates and charges on businesses. The SNWA Board of Directors will consider the BIS at its meeting scheduled for January 20, 2022 and increases to water rates at a public hearing on February 17, 2022.
