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Water rates will be higher than needed

July 29, 2011

The federal government water experts say Danville’s water utility provides clean water most of the time. On occasion, the chlorine used to make the water safe makes it unsafe, if the plant doesn’t filter out enough organic material. It’s unsafe for a certain group of people, but still safe for most folks, at least until 2014, when it becomes unsafe for everybody.


The feds can fine the utility if it doesn’t comply with their 2014 mandate.
The fine can be avoided if the utility spends customers’ money to improve the filtering system. This mandate isn’t concerned about cost. It’s a utility and customer problem. That’s why its called an “un-funded federal mandate.”


The mandate doesn’t require the water plant be expanded to provide additional capacity. It doesn’t mandate physical improvements to the plant or expansion of its customer base. Commissioners’ expansion plans represent a separate policy and additional costs. Expansion costs shouldn’t be confused with mandate costs.

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Currently, mandate costs are included as a part of expansion plans and costs.
Danville’s commissioners requested proposals from four engineering firms for their recommendations and cost estimates. For whatever reasons, they selected HDR, which said, depending upon commission demands, costs can range from $19 million to $25 million.


Commission figures plan $3.4 million in grants with $16 million borrowed.
Debt repayment, at 4 percent, takes 20 years at $3.44 per month per account or 10.5 years at $5.52.


Rates can then drop.


Commissioners plan repayment over 20-40 years at $5.52. They collect, at minimum, some $14 million more than needed for debt payment.


William Pease
Danville

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