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Pioneer unsure of rates for new plant - UpstateToday.com

Pioneer unsure of rates for new plant

Posted on March 3, 2017

By Justin Lee Campbell

The Journal

SENECA — An Oconee County rural water provider with plans to build a $19.4 million treatment plant has not yet determined the rates it will charge customers for water once construction is completed.

Pruitt

“I don’t know the new fee schedule,” Pioneer Rural Water District general manager Terry Pruitt said. “I don’t know how rates are going to be set.”

Pruitt confirmed to The Journal this week that Pioneer expects the average customer to pay $3.50 more per month under the undetermined fee schedule once construction is complete. Pruitt said the figure is based on an initial 7.5 percent increase in rates to pay back the debt service.

The Pioneer board will hold a scheduled meeting at 3 p.m. Tuesday at the district’s office at 5500 West-Oak Highway in Westminster. The meeting agenda includes a financial report and water treatment plant update.

The Journal reported in February that Pruitt said Pioneer has “one rate for everybody.” Pioneer’s current water rate is a flat fee of $33.80 for the first 3,000 gallons, then $5 per 1,000 gallons after that, according to a fee schedule obtained by The Journal. Whether or not Pioneer’s new fee schedule will have “one rate for everybody” is uncertain, according to Pruitt.

“It depends on how the rate structure is set up and whether the rates are based on 1,000 gallons or a tier system,” Pruitt said when asked if residential customers will shoulder more of the debt than commercial or agricultural customers.

Residential customers account for 75 percent of Pioneer’s water usage, according to a feasibility study for the planned treatment plant. Agricultural customers account for 16 percent of water usage, while commercial users make up 9 percent.

A tier system would set different rates for different types of customers.

Oconee Joint Regional Sewer Authority executive director Bob Winchester attended a Pioneer board meeting in January to learn how the plant would affect the rates of OJRSA, a commercial customer of Pioneer. Winchester told The Journal that Pruitt said at the meeting commercial customers like the sewer authority could expect an increase of $1.50 per 1,000 gallons.

Pruitt disputed that figure and told The Journal that Pioneer charges one rate for all customers.

The water district, established by the state legislature in 1965 and now serving 7,000 customers in Anderson and Oconee counties, adopted a resolution in January approving construction of the water plant in anticipation of a $19.4 million waterworks revenue bond.

According to figures from OJRSA, the total cost to build the plant reaches approximately $26 million with a 2.25 percent interest rate over 40 years.

Chuck Joye of the engineering firm Design South gave Pioneer’s board an updated cost/benefit analysis for the treatment plant in November 2014 that he said, “gets more attractive as we go further out in time.”

Joye said across a 20-year “time horizon” the present worth cost of a water plant would be about $31 million, while the present worth cost of continuing to buy from Seneca and Westminster is about $38.5 million and the present worth cost of connecting to the Anderson Regional Joint Water System is $38.9 million.

Through a Freedom of Information Act request, The Journal obtained the feasibility study that Design South conducted for Pioneer and confirmed Joye’s figures.

A chart of the “life cycle analysis for alternatives” to a new plant broke down annual costs for buying water wholesale from Seneca and Westminster, connecting to ARJWS and implementing a new water treatment plant.

The chart also broke down projected debt and operation and maintenance costs. Pruitt said the figures rely on a doubling of Pioneer’s customer base from 7,000 to 14,000 in 20 years.

According to the chart, the cost of debt and operation, maintenance and water costs over a 20-year period for a new water treatment plant totals about $89.2 million.

The life cycle chart also shows that cost per 1,000 gallons for a new plant increases just less than a dollar over 20 years from $2.96 in 2016 to $3.95 in 2037.

The debt and annual costs for connecting to ARJWS totals about $68.7 million, while the cost per 1,000 gallons would increase from $3.53 in 2016 to $4.67 in 2037, according to the chart.

The debt for buying water from Seneca and Westminster plus additional debt for system improvements totals about $70 million, with rates increasing from $3.58 in 2016 to $4.67 in 2037.

A 2016 impact study by accounting firm Payne, White and Schmutz that The Journal also obtained through a FOIA request said the present value of the annual costs for the current purchase of water agreements and system improvements through 2038 is $49.9 million, while the cost of the water plant is about $46.1 million.

Pruitt said that those numbers are “completely useless” if Pioneer’s customer base does not double by 2037.

One thing that cost Pioneer nothing is the land for the proposed treatment plant on S.C. Highway 59 near the Golden Corner Commerce Park on the south side of Cleveland Creek. Oconee County Council voted in 2014 to donate 70 acres to Pioneer instead of selling it land inside the park.

Pioneer and the county never finalized an original agreement for the county to sell 25 acres in the GCCP to Pioneer for $132,000. The Pioneer board of directors accepted the county’s donation in July 2014.

“You going into the water business is the best thing for the future of your customers and stabilizing your rates and indeed controlling your future,” Joye told the board four months later.

Attempts to reach Joye for further comment were unsuccessful as of press time Friday.

The impact study confirmed Joye’s assessment.

The firm concluded “the construction and operation of the (water treatment plant) projects to be more cost beneficial to Pioneer” than continuing to buy from Seneca and Westminster.

According to the study, the projected first-year cost of buying water from Seneca and Westminster would be about $3.27 per 1,000 gallons compared to $2.90 for a new plant.

The study said Pioneer’s current rate is $1.83 per thousand gallons.

Steven Bradley contributed to this report.

justin@upstatetoday.com | (864) 973-6685

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