Board votes to buy Florida Water

The Florida Governmental Utility Authority unanimously approves the purchase of 16 Citrus systems. The deal could go through by December.

ORLANDO - The Florida Governmental Utility Authority's board of directors unanimously agreed to purchase Citrus County's Florida Water Services systems on Thursday, taking a major step toward closing the deal in December.

Board members approved the purchase of Florida Water's 11 water and five wastewater systems in Citrus, as well as systems in Charlotte and Lee counties.

The Citrus systems are valued at $16-million, and the FGUA plans to finance the purchase through bonds.

The FGUA has been making overtures to buy Florida Water Systems statewide for at least two years. On July 24, a tentative agreement was reached between the company and the FGUA, a coalition of local governments.

County Administrator Richard Wesch said the goal from the beginning has been to transfer an investor-owned utility to public ownership. Wesch is one of four FGUA board members.

"It's been a long road," he said. "I do believe this transaction is in the best interest of residents who will be affected by it."

Wesch's goal is for Citrus County to ultimately buy the 16 Citrus systems, but the County Commission has not yet committed to that purchase.

Florida Water's major system in Citrus is Sugarmill Woods, where 3,400 of the utility's 9,029 Citrus customers live. The remainder live in Pine Ridge, Citrus Springs, Gospel Island and seven other communities.

Skip Christensen, president of the Sugarmill Woods Civic Association, attended the FGUA meeting Thursday and asked the board to maintain current rates and to "ensure that the transfer goes smoothly."

He also urged the FGUA to consider water reuse and increase capacity at the Sugarmill Woods wastewater treatment plant.

Both Wesch and Christensen said the key to boosting consumer confidence in the FGUA is to keep the lines of communication open. Wesch promised that once the sale is complete, his office would field customer complaint calls.

"As we go through this, we will evolve," Christensen said. "We will write the rules as we encounter the situation. I don't anticipate a problem."

One issue raised by Christensen in a letter to the County Commission, but not at the FGUA meeting, is the role played by Robert Knight, the county's director of utility regulation.

Knight advises the Citrus County Water and Wastewater Authority, the local version of the Public Service Commission. The board hears all requests for rate increases from the 11 private utilities that operate in Citrus.

Knight also fields customer complaints about these private utilities. Yet as a county employee, he reports to Wesch.

Christensen questioned whether Knight could maintain his independence from Wesch, and act as a genuine ombudsman for consumers.

"He's trying to represent the interest of customers, yet the person he has to yell at would be his boss," Christensen said.

Wesch, however, would likely not be the one appearing before the board asking for a rate increase, but rather a lawyer representing the FGUA, Knight said. He dismissed the implication that he would be unduly influenced by Wesch in granting rate increases to the FGUA if the sale goes through.

"There's a potential of a conflict of interest, but the allegation of the potential is far from saying there actually is a conflict of interest," he said.

Christensen also questioned the amount of money the FGUA could pay in the form of "regulatory assessment fees" to Knight's office.

In 2002, Florida Water paid $180,930 in fees, the majority of which pays for the salaries of Knight and his secretary. In total, the 11 private utilities in Citrus pay $272,545 in regulatory assessment fees, while Knight's budget only amounts to $170,000.

The excess goes into a reserve account, which now has about $500,000, and is set aside to pay for attorneys' and expert witness fees in the event of a major rate dispute with a utility.

The money is also used to cover expenses of utilities that go out of business until they are bought by new owners.

Right now, utilities pay 4.5 percent on each dollar they charge to customers. Christensen has requested that amount be reduced to 2 percent, or that the amount set aside in reserves be increased to cover bond payments in case the FGUA has a shortfall in buying the Citrus systems.

He also suggested that the money could be used to absorb rate increases, but regulatory assessment fees can't be used for this purpose, Knight said.

- Archana Pyati can be reached at 860-7309 or apyati@sptimes.com

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