Oconee official: Pioneer project data ‘doesn’t add up’
By Steven Bradley
WALHALLA — Pioneer Rural Water District’s general manager says constructing a planned $19 million water treatment plant is not based on future growth despite analysis from one Oconee County official suggesting the numbers for the project don’t add up otherwise.
Pioneer’s Terry Pruitt told The Journal last week the numbers in a life-cycle analysis that was instrumental in the district’s decision to move forward with the plant “are based on a doubling in the customer base.”
“I don’t know if (the analysis) really looked at it being doubled in size,” he said. “It just looked at growth to the point of the plant needed to be expanded. … You could say the expansion of the plant is based on a doubling in (millions of gallons per day) over 20 years.”
County council voted unanimously Tuesday night to explore “all means” to halt the project, including withholding a building permit, until Pioneer’s numbers could be verified and the legality of the project was confirmed by the state attorney general.
Before the vote, county administrator Scott Moulder analyzed data from a report by accounting firm Payne, White and Schmutz on the potential impact of construction of a Lake Hartwell water treatment plant to the ratepayers for Pioneer.
In comparing Pioneer’s finances for constructing the plant versus continuing to purchase water from the cities of Seneca and Westminster, Moulder concluded, “some of it just doesn’t add up in my opinion.”
Moulder said Pioneer’s data showed approximately a 26.9-percent growth rate for usage — from about 582 million gallons per year to 739 million in 2037 — across the course of the analysis.
“So you’re showing a 26.9-percent growth in your water usage, but you’re showing a 100-percent growth in your population estimates,” he said. “So I’m assuming for the 100-percent growth, either we’re going to be more efficient and use less water per capita over that time period — or something’s off there.
“That doesn’t really compare appropriately to me.”
Additionally, county officials said, if Pioneer’s cost benefit analysis is based on water usage, it appears unlikely to come from population growth.
Data provided by county economic development director Richard Blackwell said the population in Pioneer’s service area — based on census data and forecasting from the Appalachian Council of Governments — from 2000-21 equates to about 15-percent total growth. The forecasted percentage growth is slightly more for households — from 4,362 to 5,231, or an increase of about 19 percent.
Moulder also noted the report showed a 26.9-percent increase in demand of water usage over the 20-year time period, but a 268-percent cost increase to continue buying wholesale from Seneca and Westminster.
“If we take the percent demand out, that means we’re seeing a 240-percent increase in our rates over a 20-year period,” he said. “I don’t see how that’s possible.”
Moulder said a present-value analysis of buying the water wholesale from the cities of Seneca and Westminster began with a $2 per thousand gallon cost in 2017, according to Pioneer’s figures, but that number inflated to $5.81 by 2037.
“That’s a 190-percent increase in rate — with only a 26.9-percent increase in water usage,” he said. “I don’t see how that adds up, I really don’t.”
The administrator said that amounts to a 10.45-percent annual cost increase, rather than the 4 percent he had been able to account for or the 4.55 percent Pioneer had cited from 2007 negotiations with Westminster.
“That didn’t add up to me either,” he said.
“To me, when I look at this, I have a lot of questions about how are you factoring in the cost increases (in buying water) when you’ve been told (by the city of Seneca) over the next seven years it’s only going to be a 1-percent increase and not 10.5 percent, which they’ve reflected in here,” he said.
Also, in analyzing Pioneer’s data for continuing to purchase water wholesale from Seneca and Westminster, Moulder questioned an annual $690,000 cost for “one-time capital improvements to the system in order to continue with the service.”
“My question is: Is the $690,000 mistakenly run down every year as an annual cost, or is that supposed to just be one time?” he said.
Moulder noted that would equate to about $13 million in improvements needed, but said those should not be just isolated to obtaining water from the cities.
“Do you not have to make those same system-wide improvements if you’re building a water treatment plant? I would probably argue yes,” Moulder said.
The county administrator said that based on “one-time improvements,” he did not believe that including the $690,000 annual cost for those improvements is a “fair reflection of what the actual cost would be on a wholesale basis.”
Asked about $690,000 annual upgrades by councilman Julian Davis, Pruitt said the improvements necessary were “infrastructure improvements” and “line-size upgrades in terms of the logistics of get water from Point A to Point B, also pump station improvements, additional pumps, anything that we needed to be able to continue to purchase water from Westminster and Seneca.”
“There’s a series of upgrades,” Pruitt said. “Certainly we could provide that information as well. But logistics — just getting the water from Point A to Point B — where you need to get it to serve the customers is what we were looking at.”
Asked about the lines upgrades and why they would not be needed to supply water to customers regardless of how water is obtained, Pruitt said many of the upgrades “would not be implemented or needed should we build the water treatment plant.”
Pruitt also refuted the notion that the implementation of the water treatment plant is based on growth in the population of its service area or its customer base.
“It’s not looking out into the future saying, ‘It’s going to take us to increase us by 25 percent or 30 percent to be able to provide funding for the water treatment plant,’” he said. “Those numbers are based on our existing population today. Again, as the population grows and demands grows, expenses also will grow.”
Davis asked Pruitt about an 2012 attorney general’s opinion that Pioneer’s charter did not allow it to construct a water treatment plant if the district could reasonably obtain water elsewhere.
Pruitt said the U.S. Department of Agriculture — the source of Pioneer’s financing — “combed through it with a very fine-toothed comb from top to bottom to assure the validity of the project,” but admitted it was not a legal opinion.
“If I’m not mistaken, the (state attorney general’s) opinion wanted us to exhaust all options with regard to water, which — we’ve done that and showed the validity of the project to not only the USDA, but the Office of Regulatory Staff,” he said.
Responded Davis: “My concern is not that you can pay back the loan, my concern is whether you’re doing what’s best within your charter. … Oconee County economic development could stall in that area. And we’ve got a lot of sewer sitting in that ground (at the Golden Corner Commerce Park).”
“It’s very worrisome to me that I hear, ‘Well, I don’t know, we’re still working on the rates,’” Davis added, “because y’all have been at this project for a long time.”