PUD and Town owe best decision to ratepayers

To The Eagle:

Is there a problem with the Town of Cathlamet’s long term water contract with the Wahkiakum Public Utility District #1? There is for the Town, and here’s why. The current contract (which expires in 2037) provides for the Town to sell 41% of the water it produces for 18% of the total revenue it receives. But there’s more. The contract requires the PUD to pay the Town for the Town’s defined cost of producing water plus ten percent. But the defined cost is less than the true cost of producing water, which includes interest on debt used to buy and repair the Town water treatment plant and distribution system, and a share of the water lost due to leaks, hydrant flushing, and other non-metered losses. The PUD has generally outmaneuvered the Town in avoiding paying those true costs by claiming they aren’t allowed in the current contract. To approach fairness to the Town’s ratepayers, the contract needs to be fixed.

In March 2012,the Town sought to modify the contract to include the true costs when calculating (in a complex formula called the summation statement) what the PUD owed the Town for water purchased. The contract allows renegotiation every five years. The Town and the PUD agreed to open negotiations, and not settle on payment terms for 2012 (to be paid in 2013) until agreement was reached on addressing the Towns concerns about interest and water loss costs. Confidential negotiations ensued for 19 months. The Town proposed a compromise settlement to the PUD September 17 (?), 2013. The Council requested an up or down vote by the PUD Commissioners at their November 4, 2013 meeting. The request was denied in a contentious discussion, as reported in the November 7 Eagle.

The Eagle story did not report the Town’s testimony on options and consequences. The PUD repeatedly asked for the 2012 Summation Statement, overlooking the agreement that none would be written until the core interest and water loss issues were negotiated. Here is the crossroads facing the Town and Puget Island ratepayers.

1. Status quo: The PUD continues to benefit from buying below-cost water from the Town by paying nothing for interest and water losses. The Town can’t and shouldn’t avoid its fiduciary duty to its ratepayers by taking on major debt for future improvements (like a new $1 million water intake towards which the PUD pays nothing. The system becomes maxed out in some years down the line, and the state DOH steps in to limit future connections and growth.

2. The PUD goes its own way: It obtains new water source rights, gets permits, and builds a new water treatment plant to serve Puget Island. Estimated cost: $6+ million, spread over about 535 Island water customers.

3. A win-win deal: The PUD pays somewhat more for water by sharing the interest and water loss costs. The Town can afford to make system fixes necessary to meet future demand and economic growth, and the PUD avoids the enormous expense of setting up a parallel water system. This clearly seems to be the wisest path.

The PUD Commissioners and the Town Council owe the best possible decision to their respective ratepayers, and to the entire Wahkiakum County community. I call upon the deciders to make the best choice in the public interest. The future is in our hands. Please study the facts and let your voices be heard.

Richard Swart, Cathlamet