The Prichard Water Works and Sewer Board is looking at ways to cut ties with the Mobile Area Water and Sewer System, just about a year-and-half since voters in a referendum decided MAWSS should take control of Prichard’s assets.
In the months since MAWSS declined, the PWWSB is now looking at new wells and infrastructure to allow it to stop paying the Mobile utility for water, board Chairman Russell Heidelberg said. Currently the board pays MAWSS about $130,000 per month, he said.
“It’s a smart business decision,” Heidelberg said. “We can do our own wells and operate them for less than half of that.”
Heidelberg said the board has engaged a hydrologist to check the water supply and identify old wells that could be returned to service. The board is currently in the process of borrowing money for the project to allow it to find old wells and update them with new infrastructure, as well as reline older pipes.
Heidelberg said the board is looking to borrow between $16 million and $20 million for the project, but not all at once. He said the project would also include connecting new parts of the city to the sewer system.
Heidelberg said the board has done a cash-flow analysis which shows it is in good financial shape. It also reportedly has an AA- credit rating, which he said should be good enough for a bond.
Although there has been some confusion and a lot of frustration for Mayor Troy Ephriam over the water board and high rates, he said he supports the building of new wells in Prichard.
“I’m for anything that gets them closer to rate reductions,” Ephriam said. “Everyone should be for it.”
Ephriam said he doesn’t have authority over the board and hasn’t seen the numbers, but thinks if it can complete the plan, it should.
“If the numbers work and it’s something that can be done …,” Ephriam said. “I think it’s something they need to get done.”
Part of Ephriam’s frustration has been caused by a rate study he said he asked the board to commission more than a year ago. It turns out the board answered his request with a study in November, but Ephriam didn’t know anything about it. As recently as last week, a spokesperson using the city of Prichard’s official Twitter account tweeted out the request for a study.
As for the water bills themselves, Ephriam said they average about $65 to $70 a month, but some are excessively high for one of three reasons.
“Anything over that is due to a leak, a faulty meter or unexplained consumption,” Ephriam said.
One way to help lower the bills would be to possibly increase, from 2,000 gallons to 3,000 gallons, the minimum threshold on a standard residential bill, Ephriam said.
The November “Water and Sewer Revenue Sufficiency Study” performed by Raftelis Financial Consultants Inc. supports the idea of new wells and gaining independence from MAWSS’ supply as a way to realize future rate reductions.
“Based on engineering operating cost estimates provided by the board consulting engineer and debt service calculations provided by the board’s investment bankers, the construction and operation of wells will provide significant cost savings over purchasing water from MAWSS,” the report states. “In addition to maintaining positive operating margins, this scenario allows the board to achieve all of its financial targets … ”
The report indicates continued purchase of water from MAWSS would cause a reduction in debt coverage and a slower increase in unrestricted fund balance by 2020. The study also found the PWWSB was purchasing much more water from MAWSS than it was selling to customers.
“Historically, the unbilled water for the water utility has been around 33 percent, which is significantly higher than is typically experienced,” the report states. “If the utility were able to narrow the gap between purchased water and sales of approximately 1 million gallons per day then annual operating costs could be significantly reduced.”
For instance, the utility purchased about 2.937 million gallons per day from MAWSS, but used less than 2 million gallons per day in fiscal year 2013. Each of the following years it purchased less water, but also sold less.
Heidelberg said a lot of the lost water can be attributed to faulty infrastructure and a new project would address it.
“We buy the amount we use,” he said.
The study also points to lost revenue from a reduction in the number of active customer accounts since 2012.
“While the active accounts have been decreasing, the inactive accounts have been increasing by a greater amount,” the report states. “From fiscal year 2013 to fiscal year 2015 the number of active water accounts has decreased from 10,374 to 10,134 or 2.3 percent. A similar trend has been realized for the sewer customers, decreasing from 6,271 to 6,086 or 3 percent from fiscal year 2013 to fiscal year 2015.”
The report shows a slight uptick in active bills since the board and its one-time system manager Severn Trent parted ways in September 2015. The report notes that it’s too early to notice a trend from the data.
“The one month of billing data indicates a modest increase in the number of customers and a significant increase in the number of gallons billed,” the report states. “Active residential water customers increased by 85, just shy of 1 percent, and billed usage increased by close to 20 percent.”
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