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Study to analyze sewer-water rate differential

POSTED: August 29, 2008 5:01 a.m.

An out-of-state consulting firm will spend the next two months comparing how much it costs Gainesville’s Public Utilities Department to serve customers outside Gainesville’s city limits to the cost of providing those same services to city residents.

The study will make sure that each kind of customer bears the appropriate weight of the water and sewer system’s operating costs, the department’s director says.

The department commissions the differential study every two to three years. The last study was completed in March 2005.

The department has promised to spend no more than $69,830 on the water and wastewater rate differential study this year, which will be conducted by Raftelis Financial Consultants Inc. of Charlotte, N.C., said Lex Warmath, vice president of Raftelis Financial Consultants Inc.

When Raftelis first analyzed the department’s cost of services, Gainesville cut rates for out-of-city customers.

But, Warmath said, later studies showed that operating costs for out-of-city customers increased compared to the cost of providing utilities to Gainesville residents.

State law requires that Gainesville calculate such differences, but does not require that the city charge that difference.

The 2005 cost analysis showed that water customers in unincorporated Hall County should have to pay 2.51 times more for their water service than city residents, because it costs the department that much more to serve those customers, according to a previous report from The Times.

Yet, the City Council decided to charge out-of-city customers only two times the fee that it charged Gainesville residents.

Since that 2005 study, most of the department’s growth has continued to come from building water lines outside Gainesville’s city limits, Gainesville Public Utilities Director Kelly Randall said.

"If it wasn’t for the growth in the county, we would have done few improvements on the water system, really, because all the growth is in the county," he said.

The differential study is not to bring in more revenue for the department, Randall said. Instead, the study ensures that the department’s costs are allocated to the appropriate customers.

"There are those out there that think we would raise the differential so we could make more money," Randall said. "That’s not what it’s all about; it’s so we could make a fair distribution of the expenditures."

About 10 years ago the City Council and the Hall County Commission agreed that it was better to have an outside consultant conduct the study to make sure the city department was not overcharging its customers who lived outside of Gainesville’s city limits, Randall said.

That system has worked well, Randall said.

"I think that the differential and having an outside consultant determine what the differential should be has really helped the city-county relationship and our relationship with the county customer, because we have a good accounting procedure to validate what the differential is," Randall said.



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