WINNSBORO — Will area water companies be able to pool their resources into a regional water authority, increase their bonded debt capacity and make Fairfield County eligible for grants and capital projects needed to secure a long term solution to the county’s water shortage?
If so, what will happen to water rates for customers and how does that affect long standing water companies?
Steering committee member benefited from hearing three case studies from experts describing challenges that might lie ahead and how each area is meeting them.
Bill Clark, a former city manager in Orangeburg, filled the steering committee in on the history of the Lake Marion area, explaining how they built a water plant in the late 1990s and had their six members emerge debt free.
The group did not find an amenable deal with Orangeburg, so they looked outside the county. Eventually partners Colleton, Sumter and Clarendon counties withdrew due to the time frame it would take for water service to reach those areas, but other areas, such as Berkley, joined along with Orangeburg and Dorchester.
Engineer Fred Hannah oversaw the LowCounty Regional water system whereby water and sewer systems were donated to a new agency. That system was not a wholesale system, but it remained a retail water system. In Hampton County, funding was needed to regionalize the water system.
DHEC and MCOG helped with deregulation guidelines. The state Department of Commerce and SCANA contributed funds since water was regionalized for economic development reasons first.
He said regulatory compliance, financial struggles and operational sustainability were the greatest issues facing them. Their county growth rate was flat to decreasing. During the governance phase of the project there were no major capacity issues with domestic water production but funding was a challenge and organizational and professional fees helped bridge the gap. They also used a weighted voting system per town based on population.
Phase 2 involved operational planning, ownership and accountability. Phase 3 is the operations phase. In the short term they had to comply with regulations and consent orders. They laid out plans for infrastructure for domestic growth but economic growth was needed to fund expansion.
That is not unlike issues Fairfield County faces with the need for possibly piping water from the Broad River or Lake Monticello. Increasing bonded debt capacity for increased water capacity to lure industry is one part at the crux of the regional water authority efforts in the county.
Rural areas with small water systems struggle to remain solvent while complying environmentally. Economy of scale and fixed costs can come into line better as more people join a regional system. Hampton County became a special purpose district rather than a nonprofit entity.
The group held public meetings, but set rates according to operating costs, had yearly meetings, had internal controls with regard to the bonding process and distanced themselves from the control of town hall or town council.
Dike Spencer with the Anderson Regional Water System reported how their agency was a wholesale water entity only with about 180,000 people in its rural service area. Rural nonprofit companies were converted into special purpose districts, something that likely will happen to Mid-County Water Company during the transition to a regional water authority.
Spencer spoke of the Anderson County system where cities and municipalities collectively form the system. They purchased the system from Duke Power, meaning there was debt to buy and debt taken on to rebuild the system. They faced equity issues, they worked out a complex but equitable system of rates for members.
Spencer assured those present that a regional water system will work but that it takes time and some growing pains to get there. Santee Cooper helps regulate the Anderson system.
Roger Gaddy, chairman of the steering committee, asked about difficulties going through the governing process and determining which percent of plant capacity was awarded to which members. Spencer said they used a weighted voting system where the percent capacity of water owned equaled the percent weight of the vote.
“That method was controversial at first,” he said, “but was one that later was viewed as fair.”
A special purpose district could issue revenue bonds. Anderson used revenue bonds to pay for its system. That let customers retain overall ownership of the system so there was no real change in customer rights.
In the Low Country at first, five different municipalities had five different rates and they had to raise rates periodically each year. One problem was that in some areas water rates were kept artificially low for political gain and did not produce enough revenue to support a water system.
As the rate increased, he said no citizen paid more than the benchmark rate. They paid about a $5 per month increase on rates but still had rates below the 50th percentile in South Carolina. In Anderson, eventually things equaled out where rates among the members were about the same.
These issues will be discussed more at a May 1 meeting of the steering committee at 4 p.m. at the Quick Jobs center. Bylaws also will be discussed then.
Contact Kevin Boozer at 635-4016 ext. 14 or email@example.com and follow him on Twitter at @kevinboozer.