Utility offers rate freeze to customers (Citrus County)

Utility offers rate freeze to customers By Terry Witt

A letter from the manager of the Florida Governmental Utility Authority said it may be able to freeze water and sewer rates for five years in Citrus County if certain things happen, but one county official called the letter “garbage.”Robert Sheets, who is in charge of operating 11 private utilities for FGUA in Citrus County including those in Sugarmill Woods, Pine Ridge and Citrus Springs, told County Commission Chairwoman Vicki Phillips in an Oct. 14 letter the utility may not have to raise rates through 2010.

Sheets said if savings are realized through the hiring of a new lower-cost contract operator and if line extension assessments are imposed in Citrus Springs, the rates may remain at the current levels for five years.FGUA, a government-owned utility, has been criticized for proposing a $2,068 line extension property assessments in Citrus Springs. FGUA has been granted interim approval of the assessments while the county utility regulatory director reviews them in preparation for hearings in November. The assessments, in FGUA’s view, place the cost of growth on customers connecting to the utility rather than existing consumers.The government utility also has been criticized for recommending approval of a new contract operator that was high bidder for the management and operations contract. However, Sheets said FGUA has negotiated the most financially economical contract with Wade-Trim/US. He said it also provides enhanced customer service. He said the lower-cost contract will stabilize rates.“We believe that this fact, combined with our hope that we are successful in implementing our line extension assessment program in Citrus Springs, may allow us to assure the county that there will be no rate increases beyond the annual inflation indexing for at least five more years effective October 2005,” he said.

However, Citrus County Utilities Regulatory Director Robert Knight, who is reviewing FGUA’s proposed line extension property assessments, said Sheets’ Oct. 14 letter does not commit the utility to freezing rates for five years. The letter, Knight notes, only says the utility “may” be able to keep the same rates for five years.“It’s an empty promise. There’s no assurance,” he said.Knight said the letter also contradicts what FGUA is doing with the proposed line assessments in Citrus Springs. He said the assessments in Citrus Springs are a proposed rate increase regardless of what Sheets calls them.

And Knight said this is not the first time FGUA has promised to hold the line on rates.When FGUA bought the 11 utility systems in Citrus County, it made the same promise, Knight said, but the utility reneged on the pledge a year-and-a-half later when Chief Financial Officer David Miles, in a June 22, 2004 letter, made a “formal request for a limited rate increase proceeding.” Miles said FGUA wanted to increase connection charges in Citrus County.Knight also cites an Aug. 21, 2003, letter in which FGUA promised to continue to provide line extensions in Pine Ridge at a rate previously used by Florida Water Services. He said the letter pledged that line extensions would continue to cost customers $446 during the first five years after FGUA owned the Pine Ridge system. But he said FGUA has broken that pledge as well.Sheets responded that the connection charges and the line assessments are not rates. He said evidently Knight considers anything listed on FGUA’s tariff sheet a form of rates. He said FGUA considers its sewer and water charges to be rates, but nothing else.But Knight has a different definition of rates. He said any FGUA proposal that would raise the charges paid by customers is a rate increase in the county’s view. He said county commissioners have made that point and his office has taken the same position.“Evidently, they still don’t understand,” Knight said. “This letter is garbage.”