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Commissioners say that if a public utility consortium buys Florida Water Services, it will ensure control of rates and of a valuable resource.
By JENNIFER FARRELL
© St. Petersburg Times, published October 23, 2001
BROOKSVILLE -- In a move county commissioners hope will lead to their eventual takeover of the Florida Water Services system in Spring Hill, they announced support Monday for the proposed sale of the utility to the Florida Governmental Utility Authority.
Reading from a prepared statement at an afternoon news conference, County Administrator Paul McIntosh laid out the reasons commissioners are backing the sale.
First, he said, officials are concerned with protecting Florida Water customers from unnecessary rate increases. And since the utility is up for sale, he added, it will be much easier for the county to later acquire the Spring Hill system from a governmental authority than from a private buyer.
"Hernando County recognizes water as one of our most valuable natural resources," he said.
"With the troubles being experienced on our southern border by Tampa Bay Water, protection of that asset has always been of primary concern. This acquisition will facilitate further protection of that asset."
Florida Water Services seeks to sell its entire 27-county network of utilities, the largest privately owned system in the state, so that its parent company can infuse more cash into other ventures, a company spokesman said Monday.
Negotiations have been under way since last month to sell the utility's infrastructure to the Governmental Utility Authority, a four-county consortium of Citrus, Polk, Sarasota and Nassau counties. Hernando County is not a member of the consortium but may join as part of the acquisition process, McIntosh said.
The utility giant serves more than 250,000 customers statewide, including 7,865 water and 4,067 sewer users in Citrus County and 27,130 water and 6,390 sewer customers in Spring Hill.
Under the proposal, the utility authority would own the plants and pipes, but would contract with Florida Water to continue handling the day-to-day operations of the 150 systems, according to Florida Water spokesman Tracy Smith.
"For our customers, it would essentially be seamless," he said.
The authority is conducting a feasibility study and compiling an estimate of Florida Water's worth. If authority members decide at their December meeting to move forward with the purchase, attorneys from both sides would hammer out the deal, said authority system manager Robert Sheets.
But selling to the authority, a county government coalition created in April 1999 to purchase another block of utilities, is just one option, Smith said. Florida Water has also received unsolicited offers from other American and foreign firms, he said.
Its parent company, Allete Corp. (formerly known as Minnesota Power), could also decide not to sell at all, Smith said.
Allete's holdings range from automobile auction networks to electricity companies. After a shuffling of Florida Water management earlier this month, Allete began exploring ways to improve its corporate value to stockholders, Smith said.
The Spring Hill system represents about 30 percent of Florida Water's assets statewide, according to McIntosh. He estimated the local system's value at between $75-million and $100-million.
Another benefit of the sale is that the authority requires each system to be self-sustaining, McIntosh added. "No funds from Hernando County will be used to acquire other systems," he said.
That news was especially gratifying for people like Morty Miller, a Spring Hill resident who battled for much of the past decade to force Florida Water to refund $6.87-million in overpayments from local customers in the early to mid 1990s.
In May, after a labyrinthine legal case, the 1st District Court of Appeal found there was no way to force the utility to repay the 33,329 Spring Hill households that were overcharged an average of $151.72 and ended up subsidizing water users elsewhere.
In Citrus County, 3,327 Sugarmill Woods households paid an average of $543.85 more than their share.
As a result of the dispute, the Hernando County Commission took over regulation of Florida Water from the state Public Service Commission and must approve any future rate increases. In December, commissioners reached a settlement in a separate case with the utility that includes a dip in water rates and guarantees stable water and sewer rates for the next three years.
McIntosh said Monday the rate cap would remain in place.
As for the proposed buyout, Miller beamed as commissioners pledged their support Monday.
"For years I've been after the county to take it over by eminent domain," he said. "I've waited a long time for this."
-- Information from Times files was used in this report. Staff writer Jennifer Farrell covers Spring Hill and can be reached at 848-1432. Send e-mail to farrell@sptimes.com.