Private Water Companies Push Back Against Bill Requiring Rate Parity, Fines For Bad Taste

Nov 1, 2013

Water-testing equipment at the Tallahassee water quality laboratory
Credit Jessica Palombo / WFSU News

Customers of privately owned water companies could see their rates drop, if one state senator gets his bill passed in the 2014 legislative session. Sen. Wilton Simpson (R-Trilby) wants to make it illegal for private water utilities to charge a higher rate than government-owned utilities in the same county.

On Thursday afternoon in the city of Tallahassee’s water quality laboratory, small vials were rotating around a machine that looks like an old slide projector.

Tallahassee Water Quality Manager Jamie Shakar says, “This particular instrument now is running nitrates. It’s just one of the drinking water parameters. But we’re also capable of doing about 10 different parameters on this instrument just by changing out different cartridges and chemicals.”

In addition to testing for health-endangering contaminants, the state of Florida requires groundwater utilities to test every three years for “aesthetic” standards, including water’s taste, color and smell.  

Shakar says the city goes above what’s required.

“We actually collect it at people’s homes, bring the samples back here and we analyze it on a daily basis for different parameters,” he says.

But Sen. Wilton Simpson says not all water utilities are as rigorous in their investigation, based on complaints he’s heard from Pasco County customers. And he says, on top of water quality problems, rate payers have another gripe:  “’Just because I live on the wrong side of the road, I may pay $100 a month or $120 a month for water.’”

Simpson says because customers don’t get to choose which utility they’re zoned for, he wants to help equal out the rates between city-owned utilities and their privately owned counterparts, which serve more than 180,000 Florida customers.

If his bill becomes law, it would be illegal for private water companies to charge more than the average rate charged by city-owned utilities in the same county. Roughly 70 percent of cities provide drinking water service, according to the Florida League of Cities.

But private utility owners are balking at the idea.

Patrick Flynn is Southeast Regional Director for Utilities Inc., serving for more than 60,000 Florida customers. He says, “Comparing investor-owned utilities’ rates to any other municipal rate structure is not an accurate analysis.”

He says it’s simply more expensive for private companies to supply water.

“Municipality doesn’t pay taxes. It has access to lower-interest rate financing, typically through the municipal bond market. It doesn’t pay regulatory assessment fees to the PSC,” he explains.

The Public Service Commission, or PSC, is the board regulating Florida’s private utilities. Simpson’s bill also requires that commission to consider water’s taste, smell and color when deciding whether companies can raise rates.

But Flynn, with Utilities, Inc., says that’s unnecessary because customers can already air water quality complaints at rate-setting hearings.

“They do and they have,” he says.

The bill goes on to say that if water companies don’t address aesthetic quality problems, they should be fined. That was also recommended by a government-appointed water utility commission early this year. 

But Florida Rural Water Association Director Gary Williams says he doesn’t see how utilities can upgrade systems to meet additional standards without passing on the cost to ratepayers. Williams is planning to meet with Senator Simpson next week to express his concerns.