Denver “overrelies” on Denver Water’s rate and fee calculations without checking whether the city is overpaying for services, city auditors concluded in a report released Monday.  

Specifically, auditors found that the city does not verify whether Denver Water applies a discounted governmental water rate in compliance with the city’s charter; that Denver’s Department of General Services does not adequately review the city’s monthly water bills; and, the city’s Wastewater Management Division does not adequately check the accuracy of Denver Water’s fees for sewer billing services, which the latter provides on behalf of Denver.

“This dependence on Denver Water puts the city at risk of overpaying for the services it receives,” the city’s auditors said. 

Auditors said they reviewed water bills that the city’s general services unit received in 2021, identified three properties the city acquired that Denver Water billed with commercial rates – instead of the discounted governmental rate – and found that the error, which actually began in 2019, meant the city overpaid $11,000. The amount has since been credited back to the city, auditors noted. 

“The size of the city’s water consumption is so great, even small errors can have a large financial impact over time,” the auditors said.

Auditors also noted the city’s plan to consolidate all of its utility billing, including sewer, under the same system by 2024.

But auditors concluded that city is not evaluating its decision to move sewer billing in-house in line with best practices in government.

“Furthermore, we found the evaluation tool management is currently using is incorrect, incomplete, and may not be the correct tool to use for this decision,” auditors said, noting that decision involves millions of dollars in annual spending.

“Without proper consideration, the city risks making a decision that does not maximize the quality and quantity of its service at the lowest cost and best value,” auditors said. 

City officials told the auditors they agreed with their recommendations to address the latter’s findings. 

Editor’s note: This is a developing story and will be updated.