Wednesday, January 7, 2009

The Stock Island sewer utility's request to increase rates has backfired, leaving it with no choice but to decrease them.

The Florida Public Service Commission on Tuesday approved a rate reduction for about 1,500 Stock Island customers of KW Resort Utilities.

The commission agreed the utility should charge a monthly base of $18.39 plus $3.99 per 1,000 gallons used, instead of the flat rate of $47.61, a 58 percent increase.

Under the proposed rate structure, monthly bills for residential customers who use 3,000 gallons of water a month -- about average for single-family homes -- would drop from $47.61 to $30.36. High-volume water users could face higher bills. A residence using 10,000 gallons per month, for instance, would pay about $54.

The commission approved the rate, which its staff recommended, with no discussion.

The Office of Public Counsel also recommended a rate reduction, saying the utility was passing along about $836,000 in unjustifiable annual expenses and charges to ratepayers. The charges included moving and traveling expenses for company employees, or independent contractors who work for the utility. KW Resort Utilities owner Bill Smith, who owns homes in Chicago and Key Haven, passed along $21,631 in annual travel expenses, as well as the cost to transport one of his vehicles from Chicago to Key West.

"Overall, I'm very pleased with the Public Service Commission ruling," said County Com¬­missioner Kim Wigington, a utility customer who questioned the rate increase. "All of us are tightening our belts financially these days and we will welcome the reduced rates and refunds of our overpayments for wastewater service."

Wigington said the issue is bigger than just rate adjustments.

"There are far deeper implications," she said. "This could serve as a warning to anyone wishing to enter into a public-private partnership with corrupt or compromised public officials, that the public process still works and although it may take a while, it only takes a few dedicated citizens to bring light to a shady situation."

The Public Service Com¬­mission allowed KW Resort Utilities to implement a 21-percent interim rate increase while the rate case was reviewed. The funds were placed in an escrow account and will be refunded back to ratepayers, Public Service Com¬­mission spokeswoman Cindy Muir said. The utility had requested a 58 percent rate increase, designed to generate $600,000 more each year, which would have made the company's total annual revenue $1,647,998.

The utility can ask for reconsideration of the decision after the final order comes out. If it is not reconsidered, the utility can appeal the decision to the 1st District Court of Appeal, Muir said.

KW Resort Utilities spokesman Bill Barry pointed out that the Public Service Commission, following a yearlong review, has approved a 22 percent revenue increase for KW Resort Utilities. The increase was deemed necessary to support additional operational costs such as improving wastewater treatment from reuse water levels to the significantly higher advanced wastewater treatment standards, Barry said.

To achieve the revenue increase on an equitable basis, the commission modified the KW Resort Utilities rate structure, shifting much of the income basis to large-volume wastewater customers, similar to the rate structure for water consumption, Barry said.

tohara@keysnews.com