Thursday, July 24, 2014

Water Rate Structure Study RFQ

The City of San Angelo is soliciting proposals for a study on its water rate structure.  The city wishes to:

Identify and engage the most qualified consulting firm to assist the City in achieving sustainable water and water reclamation rate structures that: adequately fund:

1) operations (water, sewer, stormwater)
2) debt service (now and in the future)
3) capital improvements (West Texas Water Partnership, Reclaimed water study)
4) meet debt service ratio and bond covenant requirements (current and projected)
5) ensure that each service is operating on a self sustaining basis  (Water currently subsidizes general fund)

Expected time to project completion is 90-180 days from the date of contract approval.

Consultants have the opportunity to highlight their qualifications to conduct such an analysis.  Proposals are due in a month.  As I read the study several thoughts came to mind:

1)  The Reclaimed Water study, approved in May, may take as long as a year to complete.  How can these consultants take that study into account if it isn't finished?

2)  How will the city give guidance to consultants on future water projects, likely to be very costly?  The Hickory project was $120 million.

3)  How will the city prioritize replacement of water and sewer pipes and what is the impact of prior underspending on infrastructure maintenance and replacement?  Replacement of old iron mains in North San Angelo are projected to cost over $100 million.

4)  Will the consultants look at the city's water rights to Lake Spence and assess the cost of reestablishing a functioning pipeline?

Council waited years for staff to bring back conservation incentives.  A local committee offered free consultation on water conservation and ways to encourage citizens to continue doing their part.  I expected city staff and this committee to bring back water conservation and rate recommendations.  Instead the city may hire another consultant.

Reading between the lines, it looks like another hired gun.  The RFQ stated:

Develop strategies for implementing significant rate changes in order to reduce the adverse impact on specific customer classes.
The City raised rates in 2007 and 2011.  The average user's bill in 2010 was up 74%.  The city raised rates another 47.5% in 2011.  Another significant rate change is on the way.  Consultants will likely provide political cover. 

1 comment:

P Hines said...

Sounds like another Republic negotiation.