County Commission also agrees to implementation of Florida Public Service Commission’s annual index for water and wastewater fees, based on inflation
With no opposition from the Sarasota County Commission, the county’s Public Utilities Department staff plans to proceed with increases in customers’ water bills for the 2021 and 2022 fiscal years.
Mike Mylett, director of Public Utilities, told the board members on July 2 that staff has proposed a 1.5% increase for the next fiscal year, which will begin on Oct. 1; the FY 2022 uptick would be 2%.
That 1.5% increase will mean roughly an extra $1 million for the department, he noted. A consultant hired by staff had analyzed all the water rates, Mylett explained, and had found they are not sustainable.
The additional money will help pay for needed infrastructure initiatives, Mylett pointed out, allowing the county’s five-year Capital Improvement Program (CIP) projects for his department to stay on schedule.
The average residential water customer in a single-family home who uses 4,000 gallons a month will see his or her bill rise $2.75 a month, starting Oct. 1, Mylett said.
Additionally, Mylett proposed that the county revise its water and wastewater rate schedules to incorporate an annual price index, linked to inflation, that the Florida Public Service Commission (PSC) provides.
“This price index is widely used,” Mylett pointed out, by both private and public utilities.
A Dec. 17, 2019 PSC document regarding the 2020 index explains, “Since March 31, 1981, pursuant to guidelines established by Section 367.081(4)(a) [of the Florida Statutes] and Rule 25-30.420 [of the Florida Administrative Code], we have established a price index increase or decrease for major categories of operating costs on or before March 31 of each year. This process allows water and wastewater utilities to adjust rates based on current specific expenses without applying for a rate case [a hearing before the PSC].”
The document also notes, “Inflation should be a major factor in determining the index …”
Crediting agencies look favorably on the use of the index, Mylett told the commissioners, because it allows utility departments to “keep up with the increased cost of doing business without negatively impacting their bottom line.”
Over the past 10 years, according to a slide Mylett showed the board, the average annual increase in water and wastewater payments for a Sarasota County customer, linked to that index, would have been 1.69%.
For the 2021 fiscal year, the index is 1.79%.
For county residential customers, Mylett noted, factoring in the 1.5% water rate increase next fiscal year, plus the indexing provision, would raise the average bill $4 per month, from $74.14 to $78.14. Again, that is based on use of 4,000 gallons a month.
He showed the board members a chart that compared that total with the bills for customers in other counties and cities in the region. That chart showed the average combined bill would be $80.67.
The comparison municipalities included the Cities of Naples, North Port, Bradenton and Fort Myers. Among the other counties listed on the chart were Manatee, DeSoto, Hillsborough, Pinellas, Lee and Collier.
Mylett proposed that the index be applied only to the base charge and the consumption charge for both water and wastewater customers in Sarasota County.
When Commissioner Christian Ziegler asked what the average Sarasota County customer would be paying in the 2021 fiscal year if the index had been implemented in 2011, Mylett said he did not have that information with him, but he would provide it to the board members later.
In response to a Sarasota News Leader public records request, the Public Utilities Department also gave the publication a copy of that chart. The 2021 total would have been $84.24, the chart said.
“Do we have to get [Public Service Commission] permission to do that?” Commissioner Nancy Detert asked Mylett during the July 2 presentation.
“We do not,” Mylett replied.
He would be back before the board in August with a proposed resolution that would factor the index into the county rates, he said.
Expenses necessitating higher bills
In explaining factors that have led to the need for adjusting the amounts the county charges its utility customers, Mylett pointed out that the county’s contract to purchase water from Manatee County will expire in March 2025. Therefore, the county will need to transport water from the Carlton Wellfields, which are located in the central part of Sarasota County, north to University Parkway and west to U.S. 301. An annual debt service payment of $17 million has been projected for the bonds to be issued in the 2021 fiscal year to cover the expense of that work, according to a slide Mylett showed the board.
A staff memo provided to the commission in advance of its Feb. 4 meeting said, “Based on the 20-year water use projections, the County needs to start adding additional water supply sources gradually beginning in 2025 to meet the additional 5 [million gallons a day] average day demand increase projected in 2041.”
“Do you consider that a dead issue?” Chair Michael Moran asked Mylett, referring to the Manatee County contract.
“We have been talking with Manatee County for a few years now and have not been able to come to an agreement at the staff level,” Mylett replied.
Then Moran asked whether commissioners should talk with leaders of the Southwest Florida Water Management District (SWFWMD) about helping with those discussions.
(Before his 2016 election to the commission, Moran served on the SWFWMD board.)
“I never turn down assistance,” Mylett told Moran with a chuckle.
“We’ll talk offline about that,” Moran responded.
Commissioner Alan Maio pointed out that it appears Manatee County leaders are concerned about growing population. He indicated that that was the reason they had not been willing to come to terms with Sarasota County staff over extending the water sales agreement.
Mylett’s slide also said a new Sarasota County connection to the Peace River Manasota Regional Water Supply Authority, from which the county gets a certain percentage of its water, will cost $20 million a year in bond debt service. (A 2018 county report said the Peace River Authority that year provided 63% of the Sarasota County water supply. That was the most recent report the News Leader could find on the county website.)
Rising water demand is all the more reason, Maio continued, that the Peace River Authority, on whose board he sits, recently hired an engineering firm to work on plans for the third reservoir for the Authority. That project, Maio added, will cost about $150 million and take an estimated 10 years to complete.
When he initially asked about such a long timeline, Maio said, “They very gently reminded me that it takes three years to fill the reservoir.”
Rate study to be undertaken
During his July 2 presentation, Mylett also noted, “I’m in the process of commissioning an entire rate study for the Solid Waste Department, so we can analyze all of [that department’s] rates, fees, everything,” including the fees for disposal of hazardous waste and tipping fees at the county landfill. The goal, he added, is to ensure “we have a sustainable process moving forward.”
A slide he showed the board explained that, as a result of that undertaking, the department staff hopes to achieve the following:
- Fully fund the cost of providing high-quality service.
- Promote increased capital reinvestment.
- Provide ability to issue additional bonds for needed infrastructure.
- Maintain competitive rates and minimize future bill impacts to customers.
- Maintain financial strength and creditworthiness of the utility.