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Mad Hatter customers in Pasco are irate over water rate hikes

LUTZ — After a new owner took over their water system and jacked up the rates, some former customers of Mad Hatter Utility are, well, mad.

The Florida Governmental Utility Association bought the utility this summer for $14 million. It is also making $3.4 million in capital improvements. But those costs came with a hefty sticker shock for the 3,400 customers the system serves. In many subdivisions, water and sewer bills that ran $51 for an average home are now $89.

At a community meeting Tuesday night, an FGUA lawyer made a pitch to residents: It could have been worse.

"The rates you were looking at were going to be far, far higher in a short couple of years," said Brian Armstrong, who negotiates utility acquisitions for the multicounty government agency. Before he decided to sell to FGUA, former Mad Hatter owner Larry DeLucenay had applied for an even larger rate increase and was likely to get it, Armstrong said.

That explanation didn't sit well with many of the 70 customers who attended.

"What everybody wants here is to get the bills lowered," said Aurelio Mattiello, 66, who lives in the Turtle Lakes subdivision.

No can do, Armstrong said. The rates are pledged to long-term bonds meant to spread out the up-front costs over time.

One woman briefly took over the meeting to organize people who wanted to hire a lawyer to fight the higher rates. Mark Hrifko, also of Turtle Lakes, shouted his frustration before leaving the meeting unsatisfied.

"There's two people in my house," he said. "My bill is $89 and I don't put one drop of water on my lawn. That's way too high."

Before the purchase, Mad Hatter's rates were among the county's lowest. Now they are higher than nearby municipal systems such as Pasco County Utilities and the city of Tampa. For example, a typical home on the county system would be charged $65, with monthly bills projected to increase over four years to $72.

The rate increase Mad Hatter applied for before the sale would have sent rates soaring to $104 per month. Customers of Aqua Utilities, who pay some of the county's highest rates, can see bills topping $130.

Armstrong said the agency's goal was to stabilize rates over the long term. He said officials don't anticipate "significant" rate increases beyond inflation for the next several years.

FGUA considers itself a transitional agency. Once rates for Mad Hatter customers get closer to county rates, Pasco County Utilities can take over the system.

There are three primary factors behind the rate hikes. First, the agency had to cover the purchase price. The second factor is capital improvements. To handle increased demand, DeLucenay planned to build a costly reverse osmosis system to treat brackish well water. Instead of doing that, FGUA opted to connect with the county system. FGUA also upgraded disinfection systems at every water treatment plant.

The third factor is hiring operations staff. Armstrong said that DeLucenay ran a mom-and-pop operation and did a lot of the maintenance work himself. Under his proposed rate increase, DeLucenay planned to hire more staff because he was getting too old. FGUA has many of those costs now, as well.

Even so, many residents said the sharply higher bills should have at least been phased in over time.

"What's going to stop you next month from charging another $80?" said Richard Bolack of Turtle Lakes.

Oak Grove resident Gary Gonzalez said many homeowner associations require residents to keep their lawns green, which can spike water usage in the dry season.

"We understand we were going to get a rate increase," he said. "But they're just sugarcoating it. Tell us the truth, and bring us a realistic number."

Lee Logan can be reached at llogan@tampabay.com or (727) 869-6236.

Mad Hatter customers in Pasco are irate over water rate hikes 12/19/12 [Last modified: Wednesday, December 19, 2012 4:56pm]
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