Erie County officials: Township residents may be subsidizing low water rates for Sandusky

SANDUSKY Sandusky officials hope to increase the price they charge Erie County for water, but county
Sandusky Register Staff
May 24, 2010

SANDUSKY

Sandusky officials hope to increase the price they charge Erie County for water, but county commissioners say the proposal is hard to swallow.

A study released this week by Sandusky-funded consultant Jones and Henry Engineers, of Toledo, suggested the city raise its wholesale water price by about 28 cents for every 750 gallons of water. That would raise the average county customer's monthly water bill by about $2.24.

When city consultants rolled out the proposed increase at a Rural Water Advisory Board meeting Wednesday, county commissioners Pat Shenigo and Bill Monaghan said it's time to re-examine the way Erie County purchases its water from Sandusky.

They also said city officials use a significant chunk of county money intended for water and sewer costs on salaries for city employees not necessarily involved in water operations.

"We can't afford an increase, but it looks like you can," commissioner Pat Shenigo said to city commissioner Pervis Brown and city manager Matt Kline, as Shenigo rolled out a chart of his own calculations. "Doesn't it seem a little odd that you're selling water to your citizens for half as much money?"

While the county purchases its water from Sandusky for about $1.26 for every 750 gallons, it charges its customers more money so it can pay debts that resulted from water infrastructure improvements and upgrades in both water districts. The increased rate also pays for transmission of the water.

Shenigo and Monaghan kicked off a firestorm earlier this year when they raised rates in both water districts to help pay down the cost to install water lines in those areas. Commissioner Tom Ferrell didn't approve of the increased rates.

Now, faced with the likelihood that Sandusky will increase Erie County's water costs starting Jan. 1, 2010, commissioners say they'll have no choice but to pass those costs along to residents.

In 2006, under the leadership of Ferrell and former county commissioners Sparky Weilnau and Nancy McKeen, the county entered into a 33-year water purchase agreement with Sandusky.

Riddled with mind-numbing equations and a soup of variables, the agreement amounts to one thing, Shenigo said -- county residents are essentially subsidizing the city's water costs so city residents can pay less for water.

Others at Wednesday's meeting agreed with Shenigo's analysis, including Monaghan, Huron city manager Andy White, county sanitary engineer Jack Meyers, and Tom Reese, general manager of Northern Ohio Rural Water, which purchases water from Erie County.

In a nutshell, it works like this:

Sandusky's water plant produces more than 3 billion gallons of water each year. It sells about a third of that to its own residents, and sells nearly half to Erie County.

Shenigo, however, said the formula the city is using actually charges the county for water the county doesn't use -- about half a billion gallons. It's unknown where that water goes each year, though some speculated it was used for firefighting, hydrant flushing or possibly wasted in leakages.

At any rate, Meyers said Shenigo's calculations are correct.

The formula from the 2006 agreement charges the county for what's called "billable water," Meyers said, but what the city should be charging the county for is "produced water," since it would eliminate the half a billion gallons of water that the county pays for but doesn't use.

Reese, of the rural water agency, said he agreed entirely with Shenigo and Meyers.

If the formula was changed, it could potentially lower a county resident's average water bill by a few dollars each month.

County officials also said the city isn't using the revenue from its water department properly.

According to city records, on an annual basis, Sandusky uses at least $650,000 from water and sewer revenue to pay for "administrative costs." That includes 50 percent or more of the salaries for 16 Sandusky employees, including the city manager.

All told, a portion of the salaries for 31 city employees is paid from the water or sewer revenue, a practice county officials called "outrageous."

In Erie County, by comparison, only 1 percent of the water department revenue is used to pay for administrative services.

"We're paying for their administrative fees, and for all their lost water," Meyers said, adding it's highly unlikely the city's law director is spending 50 percent of his time -- the portion of his salary subsidized by water and sewer revenue -- on water services.

"They've got all this cash," Meyers said. "It seems like they should be using it for their capital improvement projects or (to) keep the rate down for everybody."

Apart from changing the formula, the county's other option is to slowly begin purchasing more water from the city of Huron. The 2006 agreement allows the county to lower its consumption of Sandusky's water by 10 percent each year.

Huron officials seem more than happy to oblige.

White said Huron's plant can produce 3.4 million gallons of water a day, but residents there only use 1 million gallons a day. That leaves an excess of 2.4 million gallons of water -- water Erie County could buy if it doesn't like Sandusky's price.

The ultimate goal for everyone, White said, should be a third solution: Regionalize water processing facilities under one umbrella.

"That water plant may say Sandusky on it, but it's a water plant that everyone in this community uses and is affected by," White said. "We've got to allocate this more fairly to everybody concerned."

Shenigo agreed, and said a regional water plant would lower rates for residents throughout the county.

"Why not produce water for Huron, Sandusky and Erie County residents at the actual cost of production?" Shenigo asked. "That's the fair way to do this."

Sandusky, Huron and Erie County could pay equally into the cost for water-treatment facilities, while each entity would be responsible for its own infrastructure, Shenigo said.

It's unknown where Sandusky officials stand on the issue.

City manager Matt Kline, who was at Wednesday's meeting, said the water issue may not be his to sort out.

"Come January, you'll probably be talking to somebody else anyway," Kline told Shenigo, alluding to the results of Tuesday's election.

SIDEBAR:

Sandusky owns and operates its own water plant and sells the water to its residents for $2.16 for every 750 gallons, the retail rate.

But Sandusky also sells water to Erie County at a wholesale rate of $1.26 for every 750 gallons.

The county distributes the water to its own customers, who live in two local water districts: Water District A, a more dense district with about 9,000 customers, and Water District B, a rural and less populated district with 1,130 customers.

* District A customers: Pay $4.76 for every 750 gallons, and use an average of 6,000 gallons a month. Their monthly water bill is about $38.08.

* District B customers: Pay about $7.50 for every 750 gallons and use an average of 3,750 gallons. They pay about $37.50 per month.

* Under a rate increase proposed by Sandusky, a county resident's monthly water bill would increase by about $2.24.