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KPUD report focuses on fees, projects

Kitsap Public Utility District would be able to serve the city’s water users for a considerable amount less than their current fees, according to the utility district’s latest report.

KPUD’s report, presented Wednesday to the City Council, said users consuming up to 2,000 cubic feet of water per month would pay between $35 and $40 per month, depending on whether about $2.1 million in capital projects for 2011-14 will be paid by the city in a lump sum or a monthly $5.23 surcharge paid by ratepayers.

That compares to an estimated $65 ratepayers are now charged for the same amount of water each month, according to Bob Hunter, KPUD’s assistant general manager.

The seven-page “final response” to the city’s request, focuses on finances and the 2011-14 capital improvement plan for the system. The $5.4 million plan includes $2.6 million next year for improvements in the system’s High School Reservoir, which Hunter said wouldn’t be necessary if there’s a transfer because of an “intertie” with KPUD”s North Bainbridge Water System.

That would leave about $3.1 million in upgrades and maintenance work during the next four years, and about $1 million of that would be paid for by KPUD through replacement funds collected during those years.

Hunter said the city will be asked to pay for the remaining $2.1 million because the improvements involve upgrades to the system for which the city is responsible. After 2014, KPUD would assume full responsibility for any improvements to the water system.

Hunter said KPUD would prefer payment out of the city’s existing water fund rather than hitting ratepayers with a surcharge, which would be an estimated $5.23 per month through 2014.

According to the city, there is approximately $1.2 million currently in the water fund. Through an inter-fund loan, the city has borrowed $3 million from the utility during the last year and has not made payments to this time. According to the city, it has been unable to borrow from a bank to repay the utility fund because of the pending Bainbridge Ratepayers Alliance lawsuit.

If the city agrees to pay back part or all of the $2.1 million rather than hit ratepayers with a surcharge, two possibilities for payment would be for KPUD to either borrow on a bond that the city would repay or have the city make payments directly to KPUD.

KPUD offers a four-tiered rate structure, but its “typical” water bill for its current 13,000 customers is based on the daily use of 2,000 cubic feet of water (250 gallons). Based on a two-month service period, that’s $40.72 but it would increase to $79.31 with the following additions: $20.28 for commodity charges; $7.85 for state and city (assumed) utility taxes; and, if necessary, the aforementioned $10.46 for the improvement surcharge.

Another issue is fluoridation, which the city requires by ordinance and KPUD doesn’t use in its other systems. Hunter said it wouldn’t be difficult for KPUD to serve its new Bainbridge customers (Winslow, Rockaway Beach and the system that serves the city’s public work facility), including North Bainbridge. But it would cost an estimated $1 a month per customer.

Hunter added that the Rockaway Beach system’s well is problematic in that it is directly beneath the Japanese American Internment Memorial at Pritchard Park, and it’s possible that KPUD would drill another well to serve that system.

Council members said the report’s emphasis on finances were welcomed, but some added that the city had a lot of questions about such issues as water rights, land use and watershed management that the report didn’t address.

Interim City Manager Brenda Bauer responded by reminding the council that the city has issued a request for proposals (RFP) and responses are due by Sept. 17. The hiring of a consultant would occur as soon as possible, she added.

“We hope to receive expert advice on the transfer procedure, the offer itself and other issues,” she said. “We hope this will be an interactive process.”

Hunter said he would be available for any questions the council or manager may have.

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