North Shelby sewer system regulation proposed

NORTH SHELBY – Alabama Rep. Dickie Drake is pushing for state regulation of a privately-owned sewer system operating in North Shelby County, but the system’s managing director said regulation is in place and the rates charged are justified.

Drake (R-Leeds) announced he had urged the Alabama Senate to pass a constitutional amendment allowing the Alabama Public Service Commission to regulate SouthWest Water Company, which serves about 4,300 connections primarily in the Greystone and Eagle Point subdivisions along the U.S. 280 corridor.

Drake co-sponsored and helped develop the legislation, which was approved by the Alabama House on Thursday, March 15.

“The Public Service Commission was created to protect consumers from outrageous and unfair fee increases levied by utility companies, and recent experiences in Shelby County indicate the actions of at least one sewer provider and in need of regulation,” Drake said in a press release. “Senior citizens, working families and others are finding it difficult to pay the monthly sewer rates, and continuing increases simply add insult to injury.”

Under the provisions of House Bill 467, voters would have the opportunity to ratify a constitutional amendment that brings “privately owned sewer systems that use public rights-of-way of public roads” operating in Shelby County under the review, regulation and authority of the PSC.

The bill was prompted by SouthWest Water customers’ rates increasing from $32.45 a month in 2005, when the company acquired the sewer system from Shelby County, to $112 a month, Drake’s release stated.

“This constitutional amendment simply recognizes that a private sewer company using taxpayer owned property and resources should be regulated by a taxpayer funded government agency,” Drake said in the release. “I’m proud to have worked with Rep. Arnold Mooney, the bill’s sponsor, and other members of the delegation to develop this legislation as we seek ways to provide Shelby County consumers with relief from oppressive and outrageously inflated sewer rates.”

Craig Sorensen, managing director for SouthWest Water, said the company’s rates are already regulated by a taxpayer-funded government agency.

“Our 2005 purchase agreement with Shelby County clearly identifies the structure of the monthly rate to be charged (flat fee) and limits the instances in which the monthly user fees can be changed,” Sorensen said. “Any adjustment to the monthly fee has been reviewed by Shelby County or, more recently, the North Shelby County Sewer Rate Review Board.”

Michael Cain, manager of Shelby County Water Services, confirmed that proposed rate increases are reviewed by the board, which determines conformance with the allowed increases detailed in the purchase agreement.

Board members include Cain and two residents, one from Eagle Point and one from Greystone. Members are appointed by the Shelby County Commission.

The first primary factor behind the rate increase has been a programmed annual adjustment that ended in 2016, Sorensen said.

“The county recognized when it asked SWWC to consider purchasing the system that the monthly user fee would need to be increased for any purchaser to support itself, but the county required that this necessary fee adjustment would only be made over a long period of time, 11 years at 8 percent per year,” he said.

The second factor was investments necessary to comply with mandates to treat phosphorus from the Alabama Department of Environmental Management and the U.S. Environmental Protection Agency.

“SWWC was required to upgrade the treatment facilities, at a cost of over $9 million, to treat this single element,” Sorensen said. “To put that cost in perspective, SWWC paid about $8.5 million to purchase the facilities from Shelby County, so SWWC had to, in effect, double our investment.

“Without these environmental costs, rates would be about one-third less today. It is important to understand that Shelby County would have had to invest this money also had they still owned the facility.

Going forward, there are no “guaranteed” rate increases, and adjustments would be limited specific circumstances, such as increases in the Consumer Price Index, power unit costs charged to the utility, and new capital investments.

SouthWest Water did not increase rates in 2017, Sorensen said but warned that PSC regulation could lead to higher fees through new taxes and legal and accounting costs related to rate applications.

Sorensen pointed residents to for information on efforts to treat phosphorus and manage costs.