Colorado Springs Utilities is expected to raise water rates by 12 percent annually, beginning in 2011 and running through 2016, to pay for the Southern Delivery System .

But it’s worth pointing out that those hikes will be based on two  increases totaling nearly 50 percent that occurred in 2009 and 2010.

In 2009, Utilities raised water prices by 40.6 percent  to offset the huge drop in revenue that Utilities experienced when development charges paid by home builders and developers plummeted as a result of the economic recession and the slow-down in construction, says CSU spokesman Dave Grossman.

“For every 1,000 homes not built, there’s nearly $10 million in revenue that’s no longer coming in to help pay water expenses,” he said.

A 6.2 increase, which went into effect on Jan. 1 of this year, was needed to begin construction on SDS and for improvements to existing water infrastructure, Grossman added.

One of those improvements includes a new cover for the 50-year old Highline Reservoir on Mesa Road. The storage facilility is larger than a football field and the cover is expected to cost $8.6 million, he said.

The 12-percent annual increases related to SDS will be based on 2010 rates. When the compounding factor is taken into account, rates will double by 2016.

As one reader put it, “It seems to me  it’s a little like placing a lobster in cold water and bringing the water to a boil. We might not notice a doubling of our rate if done slowly.”

Utilities says basically the same thing  in a rate filing earlier this week. “Without a water rate phase-in, customers would see extraordinary rate increases in 2013 through 2015,” it said.

The filing, which is available on CSU’s Web site, goes into more detail about the planned costs for SDS and the rate hikes. According to the document, capitol expenditures on the pipeline will ramp up slowly, with the heaviest spending occurring in 2015 and 2016.

In 2011, Utilities plans to spend $14.7 million on SDS; in 2012, $30.8 million; 2013, $49.3 million; 2014, $70.5 million, 2015, $94.7 million and 2016, $123.5 million.

CSU’s Grossman emphasized the numbers are based on a lot of assumptions, such as inflation, the cost of construction, and regional partners who might help shoulder the load.

Water bills, he acknowledges, could go up or down.

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