They’re under oath.
As York County residents await their opportunity to testify, company officials and experts have made their case why Carolina Water Service should get its water and sewer rate hikes.
“The company’s rates are not sufficient to cover the costs to serve customers and provide a reasonable return to the company on its invested capital,” said Bob Gilroy, vice president of operations for Carolina Water.
Gilroy, along with operations and regulatory affairs manager Michael Cartin, financial planning and analysis manager Robert Hunter and outside utility consultant Dylan D’Ascendis, offered up a combined 116 pages of testimony. Detailing work done and work expected in York County, along with other reasoning for the cost increases.
Last year, the utility applied for increases of 15 to more than 30 percent for customers in South Carolina, depending on area and services provided. Carolina Water has about 26,400 customers in 16 counties, on 105 water and 16 sewer systems. More than 9,700 people in York County rely on the utility. Including a major distribution system in Lake Wylie and part of Fort Mill, along with 33 smaller well-based systems.
The local impact
Carolina Water stated publicly its model is to apply for rate increases every couple of years, to avoid massive ones arriving less often. Part of the reason for the latest increase is $13.9 million in capital improvements since the last case. Just less than $200,000 of that amount is specific to York County.
“We improved service reliability by upgrading a substantial sewer pump station,” Gilroy said.
A lift station near Lake Wylie was decommissioned due to “age and safety concerns,” he testified. A new one was built nearby, where it wouldn’t be in the view of homeowners. Service contractors “had to enter the subterranean space to service or repair the pumps in the old unit. The newer units also are less likely to rupture.
“The confined space of the dry well presented risks to our personnel and contractors,” Gilroy said. “Although the wet well held the sewer water, the pumps had been installed in the dry well.”
Hydro tank replacement statewide came in at $1.3 million. Gilroy told the state public service commission, through his testimony, there were system-wide improvements made that weren’t broken out by project and cost.
“Carolina Water Service has also acted to replace water and sewer main connections, gravity lines, pumps, meters and manholes, all of which act to improve system reliability,” he said.
Still, seven more sewer pump stations in York County need replacement.
“The multiple pump stations to be addressed are obsolete in design,” Gilroy said.
Aging pipes will be addressed locally, as well as statewide, under the potential new rate system, he said.
“Carolina Water Service will replace and reline thousands of feet of aged clay sewer mains and hundreds of aged concrete and brick manholes,” Gilroy said. “This work will also decrease the potential for sewer clogs and backups impacting customer service and the environment.”
The case for cash
Increased and the cost of complying with environmental regulations, along with needed return on investment, led D’Ascendis to the conclusion rate increases are needed.
“For unregulated public utilities, regulation must act as a substitute for marketplace competition,” D’Ascendis testified. “Assuring that the utility can fulfill its obligations to the public while providing safe and reliable service at all times requires a level of earnings sufficient to maintain the integrity of presently invested capital.”
Carolina Water’s size, smaller than many similar systems of its type, factors into the cost, too.
“Company size is a significant element of business risk for which investors expect to be compensated through higher returns,” D’Ascendis said. “Generally, smaller companies are less able to cope with significant events that affect sales, revenues and earnings.”
Distant changes, local impact
Several happenings well outside of York County are impacting the price of water and sewer within it. Bulk water cost changes perhaps highest among them.
In 2016, West Columbia increased its bulk water rate by 67 percent – upping the cost for Carolina Water almost $500,000. Other municipalities have increase rates, too, including York County.
South Carolina’s fifth-highest incoming migration rate, nationwide, is a factor. Cartin testified utilities statewide will need $1.8 billion in water infrastructure improvements in the next 20 years.
Last October, Lexington told Carolina Water it would condemn and take over wastewater operations there. On Feb. 1, Carolina Water lost 2,204 wastewater customers from the move. A jury trial will determine what cost Lexington will pay for the system. A date hasn’t been set.
The loss of customers and the potential new money from Lexington could factor into future rate increase requests, if not this one.
There also have been smaller issues, like the “ghost read” situation the utility discovered in September.
“One of (the company’s) contracted meter readers was not reading our customers’ meters,” Cartin said.
The “ghost” reader was fired, and the company had to settle accounts based on water use estimates. About 1,000 customers were impacted.
More testimony coming
Up next, York County residents get their chance to testify. The public service commission hosts a hearing at 6:30 p.m. March 6 at Camp Thunderbird, in Lake Wylie. Residents can address cost, service, water quality and related issues involving Carolina Water. It will be the closest hearing in the case, with another opportunity coming April 3 in Columbia.