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Blaming economy and conservation, Tampa Bay Water eyes rate hike

EAST LAKE — For 12 years, local and state officials have urged Tampa Bay residents to stop wasting so much water.

Now the region is doing a very good job of conserving — such a good job, in fact, that Tampa Bay Water is probably going to have to charge more for water.

Pinellas County Commissioner Susan Latvala, who sits on the regional utility's board, said she knows such an increase is likely to be extremely unpopular. She predicted customers will say, "You told us to cut back and we cut back, and now you're raising our rates?"

The bottom line, she said, is that "we're too successful." After so many years of telling people to conserve, she said, "we're not selling enough of our product to cover our base costs."

The poor economy and the real estate industry's meltdown have played significant roles as well, she said.

Tampa Bay Water general manager Gerald Seeber said he has no specific numbers for the rate increase, but anticipates unveiling a proposal in three to four weeks.

The utility, which provides wholesale water to utilities that serve about 2 million people in Pinellas, Hillsborough and Pasco counties, was created in 1998 to end the overpumping of the underground water supply.

Pumping up to 190 million gallons of water a day out of the aquifer damaged the area's lakes and wetlands. During a joint meeting with Tampa Bay Water and the Southwest Florida Water Management District's board at the Brooker Creek Preserve on Monday, district officials said some of those lakes and wetlands may never fully recover.

With financial help from the district, commonly known as Swiftmud, Tampa Bay Water built a 15 billion-gallon reservoir, a 66 million-gallon-a-day surface water treatment plant and a 25 million-gallon-a-day desalination plant. The goal: reduce groundwater pumping to an average of 90 million gallons a day.

Those new facilities helped cut the region's long reliance on groundwater. In December, for instance, Tampa Bay Water pumped a mere 43 million gallons a day from its well fields.

But last year, because of cracks in the reservoir's walls, the utility drained the reservoir to figure out the cause. Meanwhile, a long dry spell meant less water was available. Swiftmud imposed the strongest watering restrictions in the region's history.

Now the watering restrictions have been eased — although Swiftmud's board decided Monday not to lift them entirely — and the reservoir is full again. The repairs, expected to cost nearly as much as the original construction, are scheduled to begin in 2012 and may require raising rates as well.

Meanwhile, though, Tampa Bay Water's projections for water usage have turned out to be far off the mark. The utility's staff had figured that demand would be 176 million gallons of water a day. Instead it's 160 million to 163 million gallons a day, Seeber said.

That is actually less than the previous year.

"I don't think in 1998 anybody ever anticipated that we would actually sell less water than we sold the previous year," Seeber said. In municipal and county governments, about 70 percent of utility costs come from labor and benefits, he said, so cutting personnel is the way they deal with declining budgets. But that won't work for Tampa Bay Water, he said, because only 7 percent of its costs come from personnel.

Instead, much of its current wholesale rate of $2.40 per 1,000 gallons of water is based on the cost of borrowing money to build the reservoir, desal plant and surface-water treatment plant, he explained. The rest of its rate is based on the price of power and chemicals — two items that have gone up in cost as demand has gone down, Latvala pointed out.

However, St. Petersburg City Council member Karl Nurse, recently appointed to the Tampa Bay Water board, suggested in an e-mail to the St. Petersburg Times that the utility's $26 million annual budget for consultants could be a good place to trim costs. Energy conservation measures could cut the power bill, he contended.

Latvala expressed a hope that sometime in the future, population growth would return to the region and the demand for water would rise again.

When asked if that would mean the rates might then go down, she paused. Then, noting the continuing increase in power and chemical costs, she said, "Probably not."

Blaming economy and conservation, Tampa Bay Water eyes rate hike 02/22/10 [Last modified: Monday, February 22, 2010 11:23pm]
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