Central Arkansas Water will serve Maumelle residents if a yet-to-be-conducted feasibility study shows that consolidating the utility and Maumelle Water Management would benefit ratepayers, Central Arkansas Water Chief Executive Officer Graham Rich said Thursday.
Rich presented the proposal for a feasibility study to a special meeting of the board of commissioners for Maumelle Water Management, the city's current water and sewer provider. Rich said he recently approached Barry Heller, the Maumelle utility's general manager, about such an arrangement, although similar discussions have occurred over the past 20 years.
The consolidation study is to be completed by late September.
"We are here to ask your permission to allow us to evaluate your system to see if consolidation would be beneficial to Central Arkansas Water and beneficial to Maumelle Water Management," Rich told commissioners. "We will spend our funds to do this."
Commissioners voted 3-0 for approval of the study, with an allowance for the board's legal counsel to review the agreement. Central Arkansas Water, the drinking-water source for primarily Little Rock and North Little Rock, uses Lake Maumelle and Lake Winona as its main water sources. The utility has about 125,000 metered customers in Pulaski, Saline and Grant counties, serving a population of about 400,000 residents.
Maumelle Water Management's water source comes from a series of wells, and the utility has long endured complaints from customers about the quality of its drinking water. If consolidation occurred, Maumelle Water Management and its commission would no longer exist. Central Arkansas Water would assume ownership, assets and operation of the Maumelle utility and absorb its employees.
"Central Arkansas Water has raised the bar up here," said Commissioner Ralph Kearney, holding his hand above his head. "It is, if not the best, one of the best utilities in this state and beyond this state. As far as I'm concerned, this [proposal] is a no-brainer."
The proposal comes on the heels of last week's recommendation by the Maumelle commissioners for a rate increase that would add $25.01 more to the average monthly bills of residential customers within three years. The utility has 7,208 residential customers among its 10,426 metered customers. About 3,000 of those meters are for sprinklers.
The proposed rate increase brought a flood of complaints from residents, city officials said. The Maumelle City Council has authority to approve any rate increase and has a July 6 public hearing scheduled on the increase. The utility's commissioners will meet again Tuesday to discuss different options that would lower the recommended increase, because of the Central Arkansas Water proposal.
"I think it's good to have the study," said Maumelle Mayor Mike Watson, who attended the meeting with four aldermen. "I told Mr. Rich that just about everybody I've talked to this week has said let's go with Central Arkansas Water and that they'd be willing to pay more to do that."
Rich said that he couldn't say ahead of the feasibility study what Maumelle's rates would be, but the agreement would be for Maumelle to become an "outside city" retail customer, such as Sherwood, instead of being a wholesale customer with higher rates. Little Rock and North Little Rock customers pay an "inside city" retail rate.
"You would hope that would be the case," Rich said when asked afterward whether consolidation would mean lower water rates for Maumelle. "I can't say that they would."
Aaron Benzing of Hawkins Weir Engineers Inc., which produced Maumelle's latest rate study, cautioned against expectations of where rates would end up under consolidation.
"I don't think that Central Arkansas Water will come back and say rates will be as low as they are in Little Rock," Benzing said. "Just so people temper their expectations."
Benzing also authored a study completed in 2013 that recommended Maumelle Water Management continue as the city's water supplier instead of buying water wholesale from Central Arkansas Water.
The main difference between that study and today, Rich said, is the cost of Maumelle becoming a wholesale customer, as proposed at that time, and a retail customer, as is being proposed now.
"I think that view [in the 2013 study] took a very technical approach, and the way we're looking at it now is more of a business approach," Rich said. "Each year we are more challenged with declining revenue. In these last two years, Maumelle Water Management, like Central Arkansas Water, has suffered from some rather wet years from frequent rainfall. The revenues you rely on from water sales are very inconsistent."
Metro on 06/19/2015