County commissioners agreed last year to use the adjustment to help pay for utilities infrastructure
During a July 2020 presentation to the Sarasota County Commission, Mike Mylett, director of the county’s Public Utilities Department, proposed that the county begin revising its water and wastewater rate schedule each year to incorporate an annual price index, linked to inflation.
The indexing is calculated by the Florida Public Service Commission (PSC), he pointed out.
“This price index is widely used” by both public and private utilities, Mylett added. Credit rating agencies look favorably on the indexing, he continued, because it allows utility departments to “keep up with the increased cost of doing business without negatively impacting their bottom line.”
The use of the index would be one means of paying for the county’s much needed infrastructure initiatives, Mylett pointed out.
County staff has been working with the commissioners to upgrade all three major wastewater treatment facilities, which will cost hundreds of millions of dollars, Chair Alan Maio has noted.
This week, the commissioners unanimously approved implementation of the index for 2021, which is 1.17%. The item was part of their Feb. 24 Consent Agenda of routine business matters. No one offered any comments on the action, as is typical with Consent Agenda votes.
In its Dec. 14, 2020 Notice of Proposed Agency Action, the Public Service Commission explained that it has found that the nation’s Gross Domestic Product Implicit Price Deflator Index (GDP) remains the best measure for determining the annual water and wastewater index. The 2021 index, the notice adds, was calculated by using a fiscal-year, four-quarter comparison of the Implicit Price Deflator Index “ending with the third quarter of 2020.”
The GDP index for the fiscal year ended on Sept. 30, 2020 was 113.849, the notice points out. The GDP index for the fiscal year that ended on Sept. 30, 2019 was 112.531, it adds. The difference between those figures is 1.318, the notice says. The calculation, therefore, arrived at the 1.17% index for 2021, the document points out.
The 2020 price index was 1.79%, a county staff memo said.
Provided to the commissioners in advance of the Feb. 24 meeting, that memo also noted that, as provided in the County Code, no less than 10 days prior to the time “a customer begins consumption at the adjusted rates, the utility shall notify each of its customers, by first-class U.S. mail, of the increase authorized” and explain in writing the reasons for the increase.
When Public Utilities Director Mylett discussed the index with the commissioners last year, he showed them a slide pointing out that, over the previous 10 years, the average annual increase in water and wastewater payments for a Sarasota County customer, linked to the index, would have been 1.69%.