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Times editorial

Utility agreement bodes well for Aloha water deal

In March 2006, customers of Aloha Utilities expected their long-standing complaints about the dark, smelly water coming from their taps to dry up in 24 months. Next week marks the two-year anniversary of the settlement agreement among the Florida Public Service Commission, the utility and its customers requiring a new $6-million treatment system to rid the utility's water of the sulfides suspected of being the source of the contamination complaints.

But, the clearer, odor-free water has yet to materialize following multiple delays, and this week Aloha's customers learned installation of the so-called anion-exchange system is on hold. With good reason.

Pasco County agreed Tuesday to join the Florida Governmental Utility Authority, a 9-year-old cooperative that acquires private utilities for public ownership. Its initial mission locally is to negotiate a contract to buy Aloha, which serves 25,000 customers in the Trinity, Seven Springs and Holiday areas in southwest Pasco. Eventually, the authority will explore buying Lindrick (Gulf Harbors), Mad Hatter (Lutz/Land O'Lakes) and Holiday utilities.

Aloha, which rebuffed earlier acquisition inquiries from the county, now seems willing to listen to what the authority can do. If a sale can be completed, the utility's private owners benefit by cashing out while escaping a state-required multimillion-dollar capital investment in its system. The county benefits from having a public cooperative run the utility and retains the option, if it desires, to acquire Aloha outright.

Most importantly, customers receive a promise of stable rates for five years and, presumably, the end of black , rotten-egg-smelling tap water. Their ancillary benefits are numerous, too. Households won't have to buy bottled drinking water, deal with discolored laundry and could even see favored real estate status by removing themselves from the long-standing stigma of living in Aloha's franchise area.

Cost savings are expected because the authority is not a profitmaker and its utility accounts remain separate, meaning rate payers in Pasco wouldn't be subsidizing the authority's operations in Polk or Osceola counties. It does not have to pay regulatory fees to the PSC and, as a government entity, its lines, buildings and equipment are not subjected to property taxes.

Still, questions remain. For starters, the authority must perform the preliminary due diligence of the utility's finances and infrastructure before the two sides settle on a purchase price. Though the authority says it didn't have to raise base rates for five years to the customers of any of the utilities it acquired previously, that does not mean Aloha's rate-payers are guaranteed escaping connection fees or minimal increases tied to inflation.

The county turned to the authority because it needed, in the words of County Administrator John Gallagher, greater oversight than he or his staff could provide in vetting a complicated, multimillion-dollar utility purchase. Calling in the experts was a wise maneuver even with the nearly $240,000 consulting fee to join.

If a deal can be consummated, it should bring an end to the more than decadelong water-quality complaints from Aloha's customers and establish accountability for the utility operations at the local level. It is a more prudent plan than one suggested previously by Commissioner Jack Mariano, who advocates having the county assume complete oversight of Aloha from the PSC.

Pasco County government has not demonstrated the ability to undertake that mission and confirmed so again Tuesday with its reliance on the cooperative to negotiate the utility purchase.

Utility agreement bodes well for Aloha water deal 02/28/08 [Last modified: Thursday, October 28, 2010 9:18am]
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