Fountain utilities director warns of lower water revenues, outlines projects and a generator reimbursement

Fountain — City utilities officials told the Fountain City Council on July 8 that lower water use this year has left rate revenue below budget, and described a set of infrastructure and billing changes intended to protect reliability and reduce costs.

"what we're doing is we're we're working to increase the reliability, of the services and the quality of services that we provide while reducing, the expenses or the costs that are, we incur to, to to provide those services," Utilities Director Dan Blankenship told the council during an annual utilities presentation.

Blankenship said the city completed a water rate study with a five‑year plan (first step implemented March 1, second step scheduled Jan. 1 next year) but through June rate revenue remained about $275,000 below the target for the year, driven largely by reduced water consumption: roughly 7.5% below the five‑year average and about 2.5% below last year. He said staff would continue to monitor and manage expenses to offset the shortfall.

Why it matters: lower consumption helps conserve water but also reduces revenue that pays for system maintenance and upgrades. The presentation outlined projects and policy changes intended to control costs and improve service without shifting unexpected risk to current customers.

Key initiatives and findings

- Automated meter infrastructure (AMI): Blankenship said the city deployed an in‑house Neptune AMI water meter data system, largely grant funded, that will allow daily (rather than monthly) meter reads and customer access to near‑real‑time consumption data. "it will enable us to actually collect, water consumption data on a daily basis," he told the council, adding that the system already generated a handful of heavy‑use alerts and leak notifications.

- Power factor billing: An audit identified billing shortfalls for large commercial/industrial customers tied to power factor accounting. Blankenship said some of those unbilled costs "exceeded a, the amount of a $100,000 a year" and that correcting billing and working with affected customers can save money for both the utility and the customers.

- Reliability and recognition: Fountain received the American Public Power Association certificate of excellence in electric reliability for 2024; Blankenship said the city's system averaged about 18 minutes of outage time per customer for the year, well inside the first‑quartile national benchmark.

- River Bend interconnection and voltage support: Staff reported an interconnection agreement from Colorado Springs Utilities that will support new northern development off Highway 85/87 and provide needed voltage support in the city's north end; the work will be funded from remaining 2019 bond proceeds and not affect the 2025 operating budget, Blankenship said.

- Fountain Creek diversion repairs: High flows in 2023 damaged diversion infrastructure; staff said state approvals are in hand and the city will complete repairs using internal crews.

- Longer‑term water capacity: Treated water capacity for future growth remains the department's top challenge. Blankenship emphasized that new growth should pay for its own supply to avoid saddling existing customers with added cost or risk and described a water adequacy ordinance (discussed during Q&A) that requires developers or annexations to demonstrate or provide adequate water resources.

Generator and joint facilities amendment (formal action)

Council considered Resolution 25‑025 to amend the joint facilities operating agreement with Widefield Water and Sanitation District to add a backup emergency generator at the Goldfield tank site and to reimburse Widefield for Fountain's 50% share. Blankenship said Whitefield (Widefield) led design and construction and that "the funding for this reimbursement is available in the remaining unspent proceeds of the 2019, utilities bond, so that will have no impact on the 2025 water fund operating budget." Council Member Geeke moved the resolution; Council Member Duncan seconded. The council voted 7‑yes; the motion carried.

Questions from council and residents

- Cybersecurity and physical security: Council Member Hinton asked about physical and cyber security for critical water and electric facilities. Blankenship said the city's tech services group is building a cybersecurity roadmap, facilities are inspected daily and risk assessments have led to physical security upgrades.

- Customer tools and conservation: Council Member Rick and others asked about customer access to AMI data; Blankenship said the system will allow customers to view daily consumption (similar to the electric portal) and that early heavy‑use alerts have already enabled staff to contact customers within days of leaks or unusual use.

- Bond and funding questions: Resident Connie Weisenhunt asked about the 2019 utilities bond. Blankenship explained that bond proceeds are limited to the projects listed in the bond documents (water and electric improvements and an operations center among them) and that the city must charge expenses to the bond consistent with the documents to avoid credit impacts. He did not provide an exact current remaining principal amount during the meeting.

- Regional reservoir project ("ROY") and long‑term storage: Water resources manager Taylor Murphy said the Restoration‑of‑Yield (ROY) reservoir project — a multi‑entity effort including Colorado Springs Utilities, Aurora and Pueblo Water — remains active. Murphy said the group is creating a governmental authority to manage the project and that Fountain is evaluating whether it should remain a participant and that any decision will be brought back to council.

Discussion, direction and next steps

- Discussion points: lower consumption and revenue shortfall; need to modernize rates for high‑demand users; projects to improve reliability and reduce loss; potential risks tied to growth and treated water capacity.

- Directions to staff: continue expense management to offset revenue shortfalls; return with more detailed metrics and key performance indicators tied to the 2024 ACFAR once available; pursue the River Bend interconnection using bond proceeds; provide more detail on water adequacy ordinance implementation and how it affects single‑family versus larger developments.

- Formal decisions: Council approved Resolution 25‑025 amending the joint facilities operating agreement to add the Goldfield generator and appropriated funds for Fountain's 50% share (funded from 2019 bond proceeds).

What remains unresolved

Blankenship and Murphy said treated water capacity for future growth is an ongoing challenge; council asked staff to continue developing financial and operational metrics and to return with proposals on rate design changes meant to shift high‑demand use off peak hours rather than simply increasing bills.

Ending note

Blankenship urged council and residents to remain engaged while staff converts the 2024 financials into business performance indicators that will guide future rate and capital decisions.