DENVER – It’s no secret to customers of Denver Water: rates are going up. Yet, what most don’t know is where some of that cash is going and how it justifies spending your money on executive salaries, perks and retention bonuses.

Whether you live in Denver or not, Denver Water probably provides your water. The state’s largest water utility serves 1.4 million people in 12 counties.

Adams County

Arapahoe County

Boulder County

City & County of Denver

Clear Creek County

Douglas County

Eagle County

Grand County

Jefferson County

Park County

Summit County

Weld County

Research by Denver7 Investigates shows Denver Water has increased water rates for 20 consecutive years. During that same period, water usage has dropped by 21 percent.

“I am seeing a consistent increase in my water bill," said Jim McNamee, a Denver Water customer.

McNamee closely watches his water bill.

“I feel like they are not telling me the whole story," he said.

Data also gathered by Denver7 Investigates shows a significant increase in the amount of money Denver Water has in the bank.

Twenty years ago, it had $107.8 million in cash reserves. Twenty years later, that number jumped to $266.1 million, a 147 percent increase.

Dever7 Investigates has also learned the average salary of Denver Water's ten-member executive team is nearly $218,000.

For perspective, that's more than Colorado taxpayers paid Governor John Hickenlooper last year ($90,000), and that's more than Denver residents paid Mayor Michael Hancock ($171,000).

Denver7 Investigates also found rate payers funded three retreats for the executive team last year, including $280 a night hotel rooms… in Denver. It’s not far from where the executive team works and calls home. Consultant fees, hotel rooms and meals came to a total of almost $87,000.

Penfield Tate, the former president of the Denver Water Board of Commissioners and current vice president, doesn’t call those major expenditures.

Denver7 Chief Investigative Reporter Tony Kovaleski asked, "So, are you telling rate payers that those expenses were 100-percent justified?"

“I think those expenses are justified," he said. “The purpose of the retreat served a couple purposes: one with the team building, and one was, as I said, just touching base with one another.”

But by all indications, Denver Water has more trouble justifying a $337,720 retention bonus it quietly offered to its highest-paid employee, CEO Jim Lochhead.

The Denver Water Board announced the bonus in a public notice. A source alerted Denver7 Investigates to what appears to be questionable decision by Denver Water executives and board members, and an apparent way to disguise the truth from the public and rate payers.

Public Notice by Robert Garrison on Scribd

“The board has determined that it is in the best interest of Denver Water to provide incentives to retain a key employee for several more years.”

Denver7 Investigates asked Tate the purpose of leaving Lochhead off the notice.

“It could have said CEO, but that's not how we worded this one,” Tate said. “Is it something we could have done differently, probably."

Denver7 Chief Investigative Reporter Tony Kovaleski sat down with Lochhead. He is the "key employee" not named in the public notice.

Lochhead said the notice did its job at conveying to rate payers where the money was going.

“The notice could have been more specific in mentioning my name, but apparently if it was brought to you by a source, it did its job,” said Lochhead.

Kovaleski: You're the CEO. Shouldn't all rate payers know that they're about to hand you another $300,000 over five years?

Lochhead: They do know.

Kovaleski: Now.

Lochhead: Because, it's been brought to their attention.

That retention bonus brought Lochhead's total compensation package to more than $600,000 last year. That is more than three times what taxpayers paid Denver's mayor and more than six times what Colorado paid its governor.

“It's a good compensation. I appreciate the compensation," Lochhead said. “The board benchmarked my compensation with other utilities and they believe that is the type of compensation that is fair and competitive for a CEO of a major water utility.”

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