After enjoying a deep discount on its water bill for 71 years, the city of Key West has agreed to start paying what the average homeowner does to run the taps: $5.85 per 1,000 gallons.
But the city wants a pass when it comes to the Florida Keys Aqueduct Authority's increased rate of $9.85 per 1,000 gallons if an exceptional amount of water is spilled by a customer.
The increase from $2.15 to $5.85 per 1,000 gallons of water would raise the city's annual water bill by $102,000 by Oct. 1, 2014.
Since 1976, Key West has paid $2.15 per 1,000 gallons of water, thanks to a lease it struck with the FKAA on Sept. 9, 1941, that points out that the utility gets to use city streets, land and the underground pipes originally planted by the Navy.
The Navy also gets a "preferential wholesale rate," as Assistant City Manager David Fernandez wrote in a memo attached to the agenda for the commission's 6 p.m. meeting today at Old City Hall, 510 Greene St.
"Ownership of the distribution system sets both the Navy and the city of Key West apart from other government and retail FKAA customers," Fernandez wrote.
But the Aqueduct Authority's appointed five-member board months ago started asking the city to pay a rate closer to what residents already pay.
In 1941, the city's water rate was 40 cents per 1,000 gallons.
That lease has no expiration date, said Aqueduct Authority Executive Director Kirk Zuelch.
"The Aqueduct leased what was in the ground from the city of Key West," Zuelch said Tuesday, the day before the City Commission is scheduled to review the increased water rate.
The Aqueduct board also meets Wednesday morning in Marathon, and Zuelch said a decision could come by the day's end.
"We're pretty close to resolving it," said Zuelch. "We've been working together with the city really since last summer. We had conversations today. The city has been very cooperative."
While the Aqueduct has offered a gradual increase over four years, city staff recommends the commission do it over three years with the maximum rate ending at $5.85 per 1,000 gallons.
City staff is worried the annual Key West water bill will stretch to $9.89 per $1,000 gallons due to increased use. That $9.89 rate is what the Aqueduct calls its "conservation rate," set to encourage customers to use less water.
It's just too much, city staff protested. Under the FKAA proposal, the combined water cost for the city would rise from $143,151 in fiscal year 2012 to about $245,420 by 2015 and $379,270 by 2016.
By fiscal year 2016, under the FKAA's formula, the city would have paid $236,119 in increased water costs, city staff estimated.
According to the lease, Fernandez wrote in the Dec. 19 memo, "the city retains ownership of the water distribution system and continues to have a right to a wholesale water rate as long as the lease remains in effect."
The $5.85 per 1,000 gallons is the lowest rate available to FKAA customers.
Key West gets its water from Florida City, where it is treated at a major plant before pumped down the island chain.