What to Expect with Hot Springs Village Water Rates – A Proposal by Public Services Director Ken Unger

At a Public Services Committee Meeting on Thursday, September 14, 2023, Public Services Director Ken Unger said that some people’s recent water bills were higher because of outdoor irrigation. Many residents were surprised by the higher water bills and wanted to know why this occurred. Under a new proposal, future water bills may climb even higher for Villagers who exceed the base water allowance.

Hot Springs Village Water Bills - Director Ken Unger Proposed Changes inside image

Unger Proposes a Change in Rate Structure

Unger said he would bring the issue of water bill restructuring to the HSVPOA Board of Directors. “The way our water rates are structured, you are allowed a certain amount of water usage in the base allowance. Many people are very conscious of this to keep water bills low and focus on not exceeding the base volume allowance.”

When you exceed the base volume allowance for Hot Springs Village water, the additional usage is still calculated at the same rate per unit as the base rate. In other words, while you pay for extra water usage over the base allowance, you are not penalized at a higher cost per unit for additional water usage.

Not Conserving Water Costs Everyone – Not Just the Higher Volume Users

Unger said that this is not, in his opinion, the way Hot Springs Village water bills should be calculated. The extra water usage in the hotter months is generally tied to irrigation, which can be very expensive for the Village. Unger said it is his opinion that the current water rate structure drove the [recent] water plant upgrade to a six million gallon capacity. On any usual day, our [the Village’s water] usage is about two and a half million gallons. You don’t have to upgrade your plant until you hit 90%, which would have been 3.6 [million gallons per day of water usage]. I don’t know what was driving it [the water plant upgrade] if it wasn’t irrigation. Our current use is about 2.5 million gallons [of water] daily,” explained Unger.

If we are in a water conservation environment, this may prevent or at least delay a need for more water plant capacity. Villagers’ decisions to irrigate their lawns could drive a need for future water plant expansion.

Unger Recommends an Inverted Block Rate Structure for Water Bills

The Public Services Director said, “I will recommend an inverted block rate structure to the Board,” An inverted block rate is also known as an inclining block rate. This is the structural form most frequently associated with a conservation-oriented water rate.

The diagram below is for illustrative purposes only and has rates lower than we pay today. This is an example of how an inverted block rate structure works and is NOT Director Unger’s specific recommendation.

Illustration of an Inverted Block Rate Structure

(This is NOT the HSV Proposed Rate Structure.)

HSV Water Rate - A Proposal Inverted Rate Diagram

“The goal of an inverted rate block structure is to make the [water] rates more progressive, which I think needs to happen in the Village on everything. If you use it, you pay for it. This keeps the base rate in control and fairly low for those who [conserve water] instead of raising all the rates.”

HSVPOA Public Services Director, Ken Unger

It is Your Choice to Conserve Water Usage

Unger said, “The goal is if you want to use the water – Great! Use it! But you are going to pay for it. Or you stop using [as much water], and you conserve. There is no incentive to have somebody control their irrigation at the [current] water rates. It is not expensive; even if they are upset by their summer water bill rising, we don’t charge much extra for exceeding water usage over the base amount.”

Water Supply Needs to Be Sufficient In Case of Fire

Unger asked, “Should the Village be in more of a water conservation environment so we don’t have to increase the water plant capacity for fire flow issues (due to increased water usage in hotter months)?” Providing water for fire protection means that a water provider must consider fire flow requirements.

When Can We Expect Changes and or Increases?

Some proposed increases in HSV water bills will be based on the requirements to fund needed improvements through bonding, but the proposed inverted rate block structure changes could happen soon. As we implement the proposed necessary utility infrastructure programs,* rate increases will be tied to these improvements and the related bonding. But we can still expect our rates to increase, regardless of bonding. Unger anticipates an increase in the base usage rate, also.

Unger Believes in Paying For What You Use

Unger feels that the rates/fees for everything in the Village should cover the real supply cost. “I believe this is true for everything you do in the Village. Shouldn’t the POA charge what it costs to support your actions?” asked Unger.


“It is great if you want to use things, but if this is driving [the POA] to spend millions of dollars, then you should pay for your usage.”

HSVPOA Public Services Director, Ken Unger

Director Unger said it would be up to the Board of Directors whether all the proposed changes are implemented, but we should expect utility rate increases. Unger also shared, “We are subsidizing water service by around $170,000 this year. We should make enough from a water/sewer environment to support the needed infrastructure work. State law requires this. This is not even in our control. We need to find ways to deal with this. We either raise all the rates or make users of greater quantities of water pay more per unit for the extra usage so we can keep the base usage cost lower. These are the only two options I am aware of.”

Let us know what you think in the comment section below.

*UPDATE ON PROPOSED HSV WASTEWATER SYSTEM UPGRADE

Contact Information for Public Services Director

Ken Unger
Director Public Services
Hot Springs Village
501-226-9609
Kunger@hsvpoa.org

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By Cheryl Dowden

Edited 09/17/23 2:44 p.m. to clarify the Inverted Block Rate Structure diagram.