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Industrial users may shoulder wastewater hikes

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A task force of city officials and business leaders studying ways to implement wastewater system improvements now favors applying a larger portion of its planned rate increases to 71 industrial companies largely responsible for costly treatment services.

The cost of doing business for those companies could increase by thousands of dollars per month beginning in July, according to a 29-page handout distributed during a March 15 meeting at Public Works offices.

The city of Springfield plans to invest at least $50 million during the next several years to modernize its wastewater infrastructure, which could result in residential and commercial rates that could double with City Council approval.

Currently, industrial customers such as Kraft Foods and Ozarks Coca Cola/Dr Pepper Bottling Co. are charged for the treatment of two common pollutants: biochemical oxygen demand and total suspended solids. A consultant team has recommended the city increase its charge per pound on BODs to $.264 from $.177 and decrease TSS surcharges to $.087 from $.101 in order to cover its actual costs. For Kraft, those recommendations would increase its monthly BOD surcharge by more than $35,000 and decrease its TSS charges by nearly $1,300, according to Springfield Public Works material provided during the meeting.
Kraft’s current monthly charges are around $114,000 and would increase to $152,000 under the proposed rate schedule, the 29-page handout said. The wastewater pollutants can result in fish kills and other environmental impacts without proper treatment, and the per-pound increases will be recommended to council in the task force’s final report.

Direct charges
Steve Meyer, co-interim assistant director of Public Works’ environmental services, said council members would get an update on the task force’s work at a March 22 luncheon. He said council should receive its final report shortly after the task force’s final meeting, which is scheduled April 19.

“What we’ve done is analyzed what it costs to remove those materials. For TSS and BOD, there has always been a charge, we are just (recommending) to adjust it to meet what it actually costs to remove those materials,” Meyer said after the meeting.

On March 15, task force members voted 9-6 to recommend more direct charges to those same industrial customers for its pretreatment and food, oil and grease, or FOG, services, which can prevent system backups. Right now, the costs of those treatments are incurred by all commercial customers. The proposed pretreatment and FOG services changes would result in increases of $434 per month for the 71 industrial clients and reduce other commercial customer bills by $4.42 a month.

Task force member Tim Rosenbury of architecture firm Butler, Rosenbury & Partners Inc. voted in favor of moving more direct costs to industrial customers.

“We’ve agreed that ratepayer fees should be linked directly to the cost of service. I think that takes us somewhere,” Rosenbury said.

Sally Hargis, vice president of corporate strategy for Ozarks Coca Cola/Dr Pepper Bottling Co., said the increases associated with treating BODs are the real concern.

“We did ask for and receive an estimate of the current proposed rate structure for the first year of the increased surcharges. For our company, that means a 36 percent increase in BOD charges,” Hargis said. “And you know what we do as an industry, we look at ways to reduce expenses.”

Hargis said a few years ago her company’s BOD charges were higher before it decided to outsource its sugar-water recycling efforts. Previously, more discharge of old product was sent down city drains, so that outsourcing resulted in less money for the city and more savings for the company. She said if the city’s industrial customers realize the proposed increases that are recommended, her company and others are likely to find new ways to reduce costs.

The task force, which has met monthly since September, plans to recommend significant rate hikes for residential and commercial customers in fiscal 2012 and 2013, with modest increases to follow through fiscal 2017. Public Works officials have said the improvements would decrease sanitary system overflows, or SSOs, which are prohibited under the Clean Air Act of 1972. City officials are currently negotiating a consent decree with regulators to prevent legal action from a discovery of system overflows in Springfield.

Recommended rates
The changes the task force plans to recommend would increase current monthly average of $15.46 for residential customers to $19.48 in fiscal 2012, $24.93 the following year and $28.06 in fiscal 2017. Rates for commercial customers currently paying $97.06 a month on average would increase to $122.24 in fiscal 2012, $156.47 the next year and $176.09 in fiscal 2017. Those changes do not include the recommendations to collect more direct surcharges from industrial customers discussed at the March 15 meeting.

Task force member Kirk Heyle of Heyle Properties said three sewer backups in six years at his Southern Hills home led to his participation in the task force. The backups occurred after heavy rainfall, Heyle said, and despite the fact that he had valves installed to prevent sewer water coming into his home.

“The water was so strong in ’08 it actually bulged up the neighbor’s tennis court,” Heyle said. “It’s unbelievable the pressure that can come through the system.”

Public Works officials are trying to reduce storm water leaking into the wastewater system through its improvement efforts, while also funding reserves to around $20 million.

Wastewater reserves had reached $30 million in recent years but are projected to be $8 million by the end of June, primarily due to reduced water usage.

Meyer has said a number of company closings, such as Willow Brook Foods, have led to decreases in revenue. Willow Brook, for example, produced $1.2 million per year for the fund.

In July, Public Works officials met with council members to discuss upgrades mandated by the Environmental Protection Agency and the Missouri Department of Natural Resources to prevent SSOs. As a result of those talks, the wastewater task force was established to determine how to fairly divide the costs of improvements.[[In-content Ad]]

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