County to consider cuts to utility rates

PANAMA CITY — The Bay County Commission agreed Tuesday to explore ways to reduce utility bills for customers in unincorporated areas.

Commissioners at a utility workshop agreed to direct staff to come back with recommendations based on the input of a utility consultant and residents who commented.

Residents who live in the unincorporated areas of Cedar Grove, Cherokee Heights and Bylsma Manor who have complained that their water and sewer bills have skyrocketed lately attended the workshop in hopes of hearing officials say they were going to reduce their utility rates.

 They were disappointed to hear a consultant say the utility debt should be refinanced but the savings should not be used to reduce rates in the near future.

The commission held the workshop to brainstorm ideas to cut rates for the almost 5,300 residents on the county’s retail utility system.

“I do not recommend immediate rate relief,” said consultant Gerald Hartman of Hartman Consultants. “In other words, lowering your rates. I am not recommending that due to the need for rate stabilization.”

Hartman outlined the reasons the county purchased the North Bay Wastewater Treatment Facility on Edwards Road in 2008. The debt from that plant, which only serves 80 customers, is one of the primary reasons for the recent rate hikes, county officials have said.

All the county’s retail customers pay the debt on a $29.8 million SunTrust loan — $21.2 million of which paid for the sewer plant bought from Gulf Coast Electric Cooperative.

The loan also funded $3.2 million in Cedar Grove bonds, a $2.7 million property on U.S. 231 for the utility system and $2.3 million for North Bay water system revenue bonds.

Hartman advised the county to refinance the debt over 30 years to reduce the $2.2 million annual payment on the loan. He said that could reduce the payment by $600,000, which could result in about a 4.5 to 5 percent decrease in customer rates.

But he recommended instead that the county stash the savings from the refinancing in reserves and enact policies to force people who are close to sewer and water lines to hook up. Hartman said his plan would call for no rate increases for the next five years.

Hartman said the forced hook-up plan would put 1,600 customers on the system in 10 years, and 300 new customers would hook on to the system as the result of new growth.

Hartman also recommended the adoption of monthly system availability fees for the county retail service areas.

“This is a system that must grow,” Hartman said. “It needs growth, and by doing so with policy changes you can stabilize the rates in the future.”

Hartman said from 2008 to 2013 rates were kept artificially low as development came to a near halt.

He said the first “bitter pill” was a rate increase of 26 percent on March 18, 2014, which still was not enough to catch up. There was another 20 percent increase this year.

Residents said they wanted the county to form one utility system in which everyone pays the same rates.

But Commissioner Bill Dozier said that is not realistic or legal.

 “In Utopia that sounds great,” he said. “But when you know about the system, and you know about the cities and the municipalities that set up their own systems and their own infrastructure, we don’t have the authority to go in there and mandate to all the municipalities that we’re all going to come under the same rate.”