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Utility's new owners plan few changes
By BRIDGET HALL GRUMET, Times Staff Writer GULF BREEZE -- If it weren't for all the controversy surrounding the $507-million deal, Florida Water Services customers might never notice their utility is changing hands. The Panhandle towns of Gulf Breeze and Milton -- which last week formed a coalition called the Florida Water Services Authority to buy the utility giant from its parent company, Allete -- plan to keep on board Florida Water's nearly 500 employees, from vice presidents to plant operators. The utility's headquarters will stay in Orlando, and everything down to customer service phone numbers and the bills will remain the same. "We feel like it's a big benefit to the customers that we're keeping this organization together," Gulf Breeze Mayor Lane Gilchrist said. The only thing changing is the ownership of the state's largest private water utility -- but in some ways, that changes everything. Instead of being owned by a privately held conglomerate in Duluth, Minn., Florida Water will belong to a government co-op whose meetings and records are open to the public. A five-member board, appointed by the Gulf Breeze and Milton city councils, will vote on system improvements and set the rates. Although the two Santa Rosa towns are located at the western edge of the Panhandle, the authority can meet anywhere to accommodate interested residents. Officials in Gulf Breeze, the tourist town that orchestrated the Florida Water purchase that stunned communities statewide, say the public ownership will mean greater accountability to users. "Who's going to be more responsive to the citizens of Wherever, Florida: a board of directors up in Duluth concerned about providing a return to their investors, or the authority we've put together that brings Florida Water under public ownership?" asked Gulf Breeze City Manager Edwin "Buz" Eddy. The transition from private company to public system removes a layer of regulation, however. Private utilities, including the old Florida Water, cannot raise rates without the approval of the state's Public Service Commission or local boards, such as the Citrus County Water and Wastewater Authority. But government-owned utilities, like the new Florida Water, set their own rates, based on the presumption they are directly accountable to the public. The County Commission approves the rates for a county-owned system; the five-member Florida Water Services Authority board will set the rates for its system. Florida Water's rates should remain the same for at least three years, aside from minor adjustments for inflation, said Ed Gray, executive director of the city's municipal bonds enterprise, Gulf Breeze Financial Services. In fact, for the first three years, Allete guarantees Florida Water will bring in enough money to pay for all scheduled projects and give Gulf Breeze a minimum $1.5-million profit per year. The city would likely see more than that, since it would get 2 percent of the annual gross revenues, projected next year at $1.8-million. Gulf Breeze would pass 20 percent of its proceeds -- at least $300,000 a year -- to its one-fifth partner, the city of Milton. "It's a minimal return compared to what Allete has been making," Gray said. If the revenues fall short in those first three years, Allete will cut a check for the balance, Gray said. The arrangement ensures the coalition can pay its $35-million annual debt service without raising rates. "I think the goal is to have a seamless transition where the rates don't go up," Jon Eichelberger, financial adviser with J.P. Morgan Chase, told the authority at its Sept. 19 meeting. The authority will create an advisory council, including "customer representatives" and a range of experts, to offer guidance when rate increases are proposed. Gulf Breeze has a similar advisory board for its city-owned utility system. "There's never been a time they made a recommendation that the City Council hasn't ratified it," Gray said. "We don't take these advisory boards lightly, and history has shown that to be the case." The sale of Florida Water Services last week caught communities statewide by surprise. Although the authority's meeting was advertised in the Pensacola News Journal classifieds and posted at several Gulf Breeze buildings, word of the proposal did not reach interested counties until it was approved. Gray said the authority followed the requirements to publicly advertise the hearing, but chose not to notify other counties interested in Florida Water. That's because all of those counties were lining up in favor of a rival proposal by a separate coalition, the Florida Governmental Utility Authority, Gray said. The coalition includes Citrus, Nassau and Polk counties. Other communities, such as Hernando County and Marco Island, gave their backing to the proposed $450-million buyout. "This may be government, but this is also business," Gray said. "Do you notify your competition of what you're doing?" -- Bridget Hall Grumet can be reached at 860-7303 or bhall@sptimes.com.
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