In FY 2023, Denver Water's treated water use fell to 59,138 million gallons and its operating revenues to US$331.8 million, while operating expenses rose to US$320.7 million. Its operating margin narrowed to 3.3%, down from 26.3% in FY 2020. When use recovered to 67,085 million gallons in FY 2025, the margin returned to 13.6%.
2026: lower sales by design
On March 25, 2026, Denver Water's Board declared a Stage 1 drought, with a target of cutting total demand by 20% through April 30, 2027. Reservoir storage stood at 80% of full, and South Platte snowpack at 53% of normal, a 40-year low.
The surcharge is not a revenue fix
From May 2026, a temporary surcharge applies to outdoor and high use: US$1.10 per 1,000 gallons in Tier 2 and US$2.20 in Tier 3, with essential indoor use exempt. The top 25% of users pay about US$76 a year more. Denver Water expects revenue to fall in line with the demand cut if customers comply, and says the surcharge offsets only part of it.
Reserves and budget cuts fill the gap
Denver Water plans to cover the rest from cash reserves and budget reductions. Which budget lines will be cut has not been published, which makes the 2027 budget the key document to watch.
How deep a full drought year could cut, how much the reserves must carry, and what the 2027 budget will reveal are examined in the second edition of the report. The full report, Utility Financial Structure and Risk: Denver Water, is available for USD 499 at https://ourfuturewaterintelligence.com/reports/utility-financial-structure-and-risk-denver-water. For a free overview, read the Denver Water Utility Snapshot at https://ourfuturewaterintelligence.com/utilities/denver-water.