Cape Fear Public Utility Authority spills more than a million gallons of raw sewage into sensitive Barnards Creek

Read news stories here:
WWAY TV3  CFPUA responds to major sewer spill
Wilmington Star News More than a million gallons of sewage spills into Barnards Creek
Associated Press  Raw Sewage Spills into NC Creek

CFPUA Could Follow Citys Lead and Jump on Pay Raise Bandwagon

With the City of Wilmington handing out bonuses, The CFPUA sets up a scenario to do the same

At Tuesday night’s Wilmington City Council meeting council members voted unanimously to pay out $1.2 million dollar in bonuses. City council sited a hiring freeze and other cost savings as the source of the bonuses. It’s very likely the Cape Fear Public Utility Authority will take a page out of the city’s playbook and make the same argument for their employees in the not too distant future.

According to CFPUA Chief Communications Officer Cary Ricks Authority employees have not seen pay increases since the Authority was created 3 years ago. There is one exception, CFPUA CEO Matt Jordan. Jordan took a controversial pay raise while his employees salaries remained stagnant. His raise made him one of the top paid officials in New Hanover County.

Rather than bonuses, the CFPUA would more likey lean towards permanent pay raises. The raises could be paid for with new rate increases Authority officials have already told customers are not too far down the road.

While pay adjustments may indeed be past due in some cases, pay raises, if passed, would be financed on the back of citizens who themselves are facing some of the worst economic conditions in decades. Many are working two or more jobs while others are taking pay cuts to keep the jobs they have. Some are losing their jobs or even their homes.

The CFPUA could also use a looming Compensation Study and Benefits Survey to justify the pay increases. The Authority has strategically used consultants in the past as a tool to justify the leadership’s agenda.

Wilmington City Councilman Ron Sparks, who also sits on the CFPUA board, voted in favor of spending the money on city employee bonuses. According to Sparks, city employees have worked hard and deserve bonuses. As a CFPUA board member, he could easily make the same argument for Authority employees.

Cape Fear Public Utility Authority Serves as a Career Ender for Local Incumbents

Elected officials serving on the CFPUA board have been voted out of office in the past 3 elections

Serving on the Cape Fear Public Utility Authority is hazardous to your political health. Whether Republican or Democrat, the Cape Fear Public Utility Authority seems to serve as the one common thread ending the political aspirations of incumbents seeking re-election.

The past 3 years have proven costly to elected officials appointed to the CFPUA Board. Former City Councilman Jim Quinn, former New Hanover County Commissioner Bill Caster, and now former City Councilman Ron Sparks all lost their bids for re-election. While they all have different backgrounds and political philosophies, they all sat on the CFPUA board and were subsequently removed from office.

Jim Quinn was the CFPUA’s first victim placing a distant 7th place in his reelection bid in 2009 Municipal election. Quinn was an outspoken proponent of the CFPUA and played an integral part in its creation in 2008. When the 2009 election rolled around voters had apparently had their fill of huge bills and rates that seemed to be spiraling out of control.

By the time the 2010 election occurred, voters had been subject to two years of CFPUA rate increases with no end in sight. To the dismay of many, the price some families were being charged for water had nearly tripled. CFPUA Board Member and County Commissioner Bill Caster lost a hotly contested re-election race where the CFPUA’s spending and rate increases were a central issue.

The CFPUA’s most recent casualty was City Councilman and CFPUA Board member Ron Sparks, who came in 4th place behind newcomer Neil Anderson in a race for 3 open seats. Sparks was an outspoken advocate for the Authority’s controversial tiered rate structure which targets larger families with higher water prices even while they are conserving water.

Fellow democrat and incumbent Laura Padgett was up for reelection as well, but skated back into office. While had both Padgett and Sparks had seen their share of controversy in office, Padgett distanced herself from the CFPUA.

More recent appointees to the CFPUA board, City Councilman Charlie Rivenbark and New Hanover County Commissioner Rick Catlin, likely have less to be worried about. Both ran on platforms calling for additional oversight and accountability for the Authority and have pushed to change the status quo.

With the CPFUA forecasting that spending and rates will continue to increase, we can be sure the controversial organization will continue to be a point of contention with voters for the foreseeable future.

CFPUA Board Members Return Political Favors

Sparks gets political endorsements from fellow CFPUA board members Quinn and Kusek

Cape Fear Public Utility Authority Board members are handing out political endorsements to help one of their own. The CFPUA’s Chairman and its Secretary stepped into the political arena to help Ron Sparks, Wilmington city councilman and a fellow CFPUA board member, get re-elected. As a city councilman, Sparks played an integral part in both of their appointments to the CFPUA board.

Sparks began running television commercials as a part of his re-election bid for Wilmington City Council. The commercial features three personal endorsements. While most of the general public wouldn’t realize it, and it’s not disclosed in the commercial, two of the three endorsements are from fellow CFPUA Board Members Chairman Jim Quinn and Secretary Pat Kusek, both of whom Sparks helped get appointed to the CFPUA.


According to the CPFUA website Quinn was appointed by the city and Kusek was a joint appointee of the city and county.


The three were instrumental this past year in keeping in place the controversial tiered rate billing structure implemented by the CFPUA. The rate structure is designed to punish families with higher prices, even while conserving water.


According to standards established by national organizations such as American Water Works Association, the CFPUAs’ tired rate structure is inherently punitive and unfair. The CFPUA does not target commercial customers with tiered rates.


Questions have been raised before as to whether political appointees should be endorsing those that put them in the positions they hold. While it’s not a violation of election law, it certainly muddies the water….not something the struggling organization needs at this time.

References Links:
Sparks Political Commercial
CFPUA Board Member Page

CFPUA Rate Hikes Hit Families Hard

At Wednesday’s CFPUA Board meeting the public speaking signup sheet was full for the first time in a long time. Most listed “rates” as the subject of discussion. As the Authority’s newest round of water and sewer rate hikes have landed in New Hanover County mailboxes, families are finding it harder to foot the bill, especially in tough economic times.

Presenters told board members about bills that had doubled since the Authority took over. Others spoke about being on a fixed income and the inability to afford the onslaught of rate increases.

More than one person stated the CFPUA had now become the highest utility expense for their family, even exceeding their power bill.

The rate increases have hit some customers harder than others. The CFPUA’s newest rate structure specifically targets families with higher tiered rates while giving commercial customers a pass, charging them a uniform rate.

According to reports in the Wilmington Star News, the next round of rate increases will likely begin in 2013, a little more than a year from now.

Cape Fear Public Utility Authority customers will not get relief from higher rates anytime in the near future. As the organization’s spending continues to grow, rates will rise unless the CFPUA finds a significant increase in revenue from improved economic conditions or is able to substantially grow its customer base.

Regime Change at the Authority

Former City Councilman Jim Quinn was appointed as Chairman of the Cape Fear Public Utility Authority Board replacing long time Chair Gene Renzaglia. Renzaglia has ruled as chair since the CFPUA’s inception in 2008. The appointment will likely result in little positive change for CFPUA customers as the two were in lock step on most issues.

Like Renzaglia, Quinn supported the CFPUA’s change to a controversial tiered rate structure. The CFPUA’s tiered rate, classified as discriminatory according to national standards, targets only families with higher pricing as more water is used. Under the CFPUA’s rate policy businesses and those with irrigation meters are given a pass and not penalized with the higher tiered rates.

Quinn has been involved with the authority since it’s inception. After it’s creation, he filled one of the two City Council seats until November of 2009 when he lost a re-election bid for City Council coming in a distant 7th place. Many credit Quinn’s loss to his participation in the creation of the controversial government organization.

While the voters did not see fit to return Quinn to city council, he was able to regain his position on the CFPUA board by lobbying for an appointment for one of the at large seats, replacing Charles Wells. Wells was CFPUA treasurer but quietly resigned due to his involvement in the ongoing ABC board scandal.

Cape Fear Public Utility Authority Chairman Threatens Police Involvement to Silence Public Comment

At Wednesday’s Cape Fear Public Utility Authority meeting Chairman Gene Renzaglia threatened Chad O’Shields with police action if he did not refrain from speaking during the public speaking portion of the meeting. O’Shields, a long time advocate for uniform water rates, spoke at Wednesdays meeting about his concerns with the CFPUA’s newest rate structure.

He noted that commercial customers pay a uniform rate of $3.96 and customers with irrigation meters pay a uniform rate of $2.64, regardless of the amount of water used. O'Shields pointed out that only families were targeted with an inclining block rate, punished with rates as high as $5.28 for essential water use. He questioned how this could be justified.

After the presentation City Councilman Ron Sparks made heated comments directed at O’Shields and his presentations. Sparks also took issue with O’Shields repeated attendance of the CFPUA meetings. City Councilman Charlie Rivenbark countered Sparks’ tirade stating the public had a right to address the board.

With ample time left in the public speaking portion of the meeting, O’Shields began to address Councilman Sparks' comments. Chairman Renzaglia immediately interrupted, attempting to speak over O’Shields and disrupt his comments, eventually threatening him with removal from the building by law enforcement if he continued to speak. In spite of the Chairman’s interruptions and threats, O’Shields respectfully finished his remarks.

While Councilman Sparks’ comments are troubling enough, one questions by what authority Renzaglia, who is an appointed board member, not an elected official, garners the police power he threatened to use. In July of 2010 the CFPUA threatened customers with police enforcement if customers were found in violation of their mandatory water restrictions. It was later exposed they had no such authority to do so.

The meeting was recorded. You may view the public comments in the first few minutes of Part 1.  Video is available here. 

CFPUA Rates: Cheaper To Water The Grass Than Take A Bath

Under the CFPUA's newest inclining rate scheme it will be cheaper for some families to water their grass than give their child a bath.

When the new rates go into affect in May it will be cheaper for some Cape Fear Public Utility Authority customers to give their child a bath in the front yard than inside their home. How can that be? Under the new rate structure, families that have a separate irrigation meter will pay a mere $2.64 per thousand gallons to water their grass. Those same families can pay rates of $3.96 to $5.28 for the water they use inside their home.

The lower irrigation meter rate was implemented as a last ditch effort to provide relief for families and homeowners under the pressure of skyrocketing water cost. Some board members also saw it as a way to encourage consumption, sell more water, and increase revenue. If the CFPUA can increase revenue, it could lead to lower rates for all customers.

In the end, this change will offer little relief, as most residential customers do not have separate irrigation meters. It may seem like a good deal now, but customers may want to think twice before running out and having a separate meter installed. While the irrigation meter rate will be $2.64 in May, it could easily be changed to $10.64 or more, if the board so desired. A gamble most customers are not be willing to take.

The question many people are asking is how can the CFPUA allow for the unlimited use of water for irrigation at the first tier price of $ 2.64 while punishing families with second and third tier pricing of up to $5.28 for essential household use? The answer is simple: There is no explanation.

The CFPUA’s inclining rate billing structure is inexplicable and sends a confusing message to customers. The irrigation meter rate is a just one symptom of a problem plagued rate scheme that few can justify. Fortunately for CFPUA customers, some board members continue to advocate for a uniform rate which would bring an end to a failed and unnecessary inclining rate structure that does more harm than good.

CFPUA Retains Controversial Inclining Rate Structure in Spite of Public Outcry

Consultants and Board Members Warn of Adverse Consequences

This is the first in a series of articles explaining the adverse environmental and economic consequences of the Cape Fear Public Utility Authority’s newest inclining block rate billing structure.

The newly adopted Cape Fear Public Utility Authority rate structure is a giant step backwards. A tough pill for customers to swallow after spending $40,000 on consultants, which in the end resulted in little meaningful change for New Hanover County families. For some board members it seems the decision to do nothing was already made before consultants were ever hired.

In March the CFPUA held a public hearing specifically to address the rate issue and take public comment. CFPUA Board members noted at the time that a vast majority of public comments were in favor of changing to a uniform rate. Just one month later, at April’s CFPUA board meeting, a handful of board members chose to ignore public sentiment in favor of the status quo.

CFPUA Finance Committee members Gene Renzaglia, Burrows Smith, and City Councilman Ron Sparks strategically brought only one rate structure recommendation before the board. The three have been the most outspoken advocates of the current inclining block rate structure, defending it at every turn. To the dismay of some board members and even CFPUA staff, they recommended the same inclining block rate structure, with only slight adjustments to the tiers.

To counter the move, County Commissioner and CFPUA board member Rick Catlin put forth a motion to change back to a Uniform Rate. Board member Mike Brown quickly seconded. After much discussion, the motion nearly past with 5 members voting for it and 6 voting against.

When the Uniform Rate proposal failed, Catlin put forth a motion to raise the first tier to 18000 gallons, seeking some equity for larger families, acknowledging the proposed 12000 gallon tier was to low. City Councilman Ron Sparks was successful in persuading Catlin to withdraw his motion.

In the end, Renzaglia and Smith successfully defended the inclining block rate structure they helped put in place, in spite of public sentiment.

The rate structure that was finally approved adjusted the existing first tier from 9000 gallons bimonthly to 12000 gallons. According to the CFPUA consultants Utility Advisors' Network Inc., the 12000 gallon tier is the typical usage of a family with about 3 members, based on national averages. That leaves the average family of four or more that would typically use more than 12000 gallons paying the higher second tier rates.

Opponents point out that a first tier set at 12000 gallons represents the CFPUA’s continued endorsement of a policy of discrimination, knowingly punishing larger families with higher prices for their basic water needs. As with most inclining rate structures, it is fundamentally unfair and leaves the CFPUA board picking winners and losers, arbitrarily granting some customers a lower rate while charging others a premium.

Another concern was that the third tier price was raised to $5.29. Consultants warned the CFPUA Board Members that tier pricing set too high would lead to a decrease in revenue. Customers simply aren’t going to gouged where they have discretionary use, such as irrigation. They’ll turn it off or seek water from other sources such as wells. As irrigation revenue is lost, prices elsewhere would have to be raised to meet budgetary requirements. Ultimately lost revenue will lead to higher prices for all customers.

Wells are not something the CFPUA wants to see encouraged. Environmentalist and concerned board members alike have warned that more wells will only worsen the aquifer saltwater intrusion problem.

While the rate structure issue is far from settled, the five CFPUA board members that voted for the Uniform rate should be commended for putting politics and rhetoric aside. They were County Commissioner Brian Berger, Mike Brown, County Commissioner Rick Catlin, City Councilman Charlie Rivenbark and Cindee Wolf. They attempted to do what was in the best interest of new Hanover County Families and the long-term financial health of the Cape fear Public Utility Authority.

Changing Tide at the CFPUA

The CFPUA’s public hearing tonight on it’s rate structure revealed a couple of things. The first was that a majority of board members realize the current rate structure has some serious problems. Secondly, the fix, whatever it may be, is not going to be pretty.

A long line of people spoke letting board members know their opinion. At one point board member Michael Brown polled the crowd in attendance asking them which structure they preferred an inclining block rate which is what we have now, or a uniform rate, the rate structure that was in place before the CFPUA was created. Only one person raised their hand for the inclining block rate. The balance that voted approved of the uniform rate.

The problems with inclining rates are numerous. Randomly set tiers benefit some families and penalize other. Over and over people with larger families spoke saying that regardless of how much they attempted to conserve they were punished with second and third tier rates simply because of the number of people in their household. The consensus was that the first tier of the current rate structure is set entirely to low.

National organizations such as the American Water Works Association suggest that if inclining block rates are used, the first tier should be set where families are not punished for essential water needs. That means the first tier would need to be 30,000 gallons. By contrast, the CFPUA's first tier is currently set at 9000 gallons.

Speakers pointed out that water supply and treatment capacity are not an issue. In fact the CFPUA has so much excess capacity that they are actively seeking to expand their customer base to increase revenue.

A vast majority of speakers advocated for the uniform rate, where all usage is charge at the same rate. The consultants noted that a move back to uniform rates was possible, but suggested it may have to be achieved through steps, rather than all at once.

Rate discussions will be ongoing through March and board members asked the consultants to present additional rate scenarios for consideration.

It’s notable that for over two years the public has petitioned CFPUA board to change the rate structure. Persistence pays off. With a number of new board members asking tough questions and pointing out the some of the fatal flaws in inclining block rate structure, the opportunity for equity for all customers by changing back to a uniform rate is greater now than ever before.

Misinformation from CFPUA Leadership Taints Upcoming Rate Hearings

In the February 5th Star News Article ”Utility urged to change rate structure” CFPUA treasurer Burrows Smith is quoted with saying “that Cape Fear Public Utility's rate structure is common practice for most utilities.” It's an apparent attempt to convince the public the CFPUA's tiered rate structure was the norm for water utilities in the state. Problem is, that’s not true at all.

Above is the slide presented to the CFPUA board.

More disturbing is that just before Smith’s interview with the Star News he had seen a presentation based on the August 2010 "Water and Wastewater Rates and Rate Structures in North Carolina" study written by the North Carolina League of Municipalities and the UNC Environmental. That study showed only 26% of utilities in North Carolina have the same rate as the CFPUA, not even close to being “the common practice for most utilities” that he claimed.

In a previous email Renzaglia stated “the State passed legislation that effectively cuts off funding to those utilities/muncipalities that did not have a tiered rate structure.” A review of North Carolina state law shows that’s not true either.

Smith and Renzaglia are the only two original board members left and defend the tiered rate structure they help put in place every turn. However, with five new board members in the past year, there is hope for meaningful change in the rate structure for families in New Hanover County.

Can these board members just say whatever they want regardless? Yes. So where is the accountability? Unfortunately, there is none. It seems to be a common strategy that’s being implemented. That is, if you say something enough times, people will believe it to be true, whether it is or not. A great way to manipulate public opinion and convince the newest CFPUA board members to blindly fall in line and support the status quo.

The bottom line is the CFPUA’s tiered rate structure punishes families for essential water needs and that’s wrong. That should be unacceptable to all board members. The current rate structure should be changed radically, if not done away with all together. For all the things the CFPUA is doing right, the rate structure is not one of them. It is government at it’s worst.

CFPUA Board Member Claims County Impact Fees Unfair

Text of an email sent to CFPUA Treasurer Burrows Smith on 2.7.11....

Burrows,

I read the February 4th Star News article “Builders Challenge New Hanover County on Impact Fees” and your complaints about the impact fees your development company was being forced to pay for schools. You didn’t like being charged premium when your retirement development was going to have little impact on the school system.

Likewise, under the CFPUA’s current tiered rate structure New Hanover County Families are punished with higher prices for essential water needs when they are no more a burden on the system per person than smaller families.

As a CFPUA Board Member I would hope you would make the same argument for the families of New Hanover County that you make on behalf of your personal business. You’re right, overbearing government fees are not fair. The CFPUA tiered water rate structure is simply bad policy and it’s time for change.

After reading that article, it seems you understand my point of view now and I look forward to seeing you lead the charge for change.

Best regards,

Chad O’Shields

CFPUA Calls for Public Hearing Before Next Round of Rate Increases

The Cape Fear Public Utility Authority has scheduled a public hearing before the next round of rate increases. The hearing will be March 9th at 6:00 pm in the Commissioners Chambers in the Historic Courthouse downtown. The hearing will allow the public to address concerns directly to the CFPUA board  regarding pending rate hikes.

One of the topics of discussion will be the results of a nearly $50,000 rate study. Many New Hanover County families hope discussions will result in meaningful change to the current rate structure. Under the current rate structure some families have seen the price they pay for essential water needs increase over 140% per thousand gallons.

For over two years families have complained to the eleven member CFPUA board they were being unfairly punished with higher rates. According to the American Water Works Association standards, the Cape Fear Public Utility Authority’s tiered water rates are unfairly punitive to larger families.

A rates workshop is also scheduled for February 23. It will be at 6:00 pm Commissioners Chambers in the Historic Courthouse downtown.

Investigation Finds Cape Fear Public Utility Authority Raised Rates in Violation of State Law

The Cape Fear Public Utility Authority's rates continue to spiral upward. The entity has plans to potentially raise rates every year for the next decade. The CFPUA has increased rates twice in 2010; a 25% increase in the fixed water and sewer rates in January and another 14% increase to the tiered rate in May. Both of these rate increases appear to have been in violation of state law.

The CFPUA was created under NC General Statute 162A. NC General Statute 162A-9(a) reads as follows: 162A‑9. Rates and charges; electronic notice; contracts for water or services; deposits; delinquent charges.
         "(a) An authority may establish and revise a schedule of rates, fees, and other charges for the use of and for the services furnished or to be furnished by any water system or sewer system or parts thereof owned or operated by the authority. The rates, fees, and charges established under this subsection are not subject to supervision or regulation by any bureau, board, commission, or other agency of the State or of any political subdivision.
        Before an authority sets or revises rates, fees, or other charges for stormwater management programs and structural or natural stormwater and drainage system service, the authority shall hold a public hearing on the matter. At least seven days before the hearing, the authority shall publish notice of the public hearing in a newspaper having general circulation in the area.”

In November of 2009, minutes show the CFPUA Board discussed and approved the 25% increase in the fixed rate portion of the water and sewer rates. That increase went into effect January 1, 2010 with no public notice or public hearing.

In March of 2010 the board approved a second rate increase of 14% in the tiered rate portion of the water rate which went into effect as of May 1, 2010. Meeting minutes again show the rate increases were discussed and approved with no public notice or hearing.

The CFPUA provided affidavits of publication from the Star News for the all Authority’s public hearings since October 1, 2009. Those records confirm that there was no notice of public hearing published for either the November 2009 or March 2010 meeting. Likewise, Authority minutes show there was no public hearing regarding rate increases.

Records from a board meeting in March 12, 2008 indicate the authority was aware of the requirement for public notice and hearing regarding rate increases. In compliance with NCGS 162A-9(a) then interim attorney Bill Lynch advised the Board that it should publish the proposed rates for hearing and approval at the next Authority meeting

Linda Miles currently serves as consulting attorney for the CFPUA Board. Records indicate she was in attendance at both the November 2009 meeting and March 2010 meeting where rates increase were discussed and approved. Minutes do not show that the requirements of 162A-9(a) were mentioned during either meeting.

Since rate hikes were imposed without due process, and in violation of North Carolina general statutes, customers have actually been overcharged for the last 12 months. Technically those overcharges should be refunded and the process completed in accordance with state law. However, that’s not likely to occur.

Refunding overcharges could cost the CFPUA millions of dollars. If the organization was forced to credit customers the overcharges, it would immediately have to turn around and send customers a bill to recoup the refund.

With the Cape Fear Public Utility Authority, citizens find themselves being governed by what is essentially a government corporation. An appointed board with the unlimited ability to spend money and raise rates, rates many would call taxes since they are levied by a government body. A scenario most likely not envisioned by our forefathers. What recourse do citizens have when these government corporations fail to comply with state laws and violate the public’s trust? Little, if any, according to the North Carolina Department of Justice(NCDJ).

Utilities Attorneys with the North Carolina Department of Justice’s Consumer Protection Division said it is the responsibility of local elected bodies, such as the City Council and County Commissioner, to keep entities like the CFPUA in check. In reality, the City Council and County Commission have little control over the CFPUA, other than the ability to appoint members to the board.

Attorneys with the North Carolina Department of Justice admitted there is no regular process for overseeing these government corporations. The only way for citizens to seek relief and force organizations like the CFPUA into compliance with NC General Statutes is by filing a civil action: an expensive proposition average citizens can not afford to undertake.

The Cape Fear Public Utility Authority’s failure to follow statute 162A-9(a) is not only a direct violation of state law, but a serious violation of the public’s trust. It is taking away the rights of the citizens to due process as required by state law. Local elected officials have called for a shake-up at the CFPUA. That shake-up may need to start in Raleigh with changes to the very statutes that allowed for the creation of entities like CFPUA.

Reference documents and links:
North Carolina Department of Justice
NC General Statute 162A
NC General Statute 162A-9(a)
CFPUA Affidavit of Publication October 2009 thru November 2010
CFPUA Board Meeting Minutes March 2008
CFPUA Board Meeting Minutes November 2009
CFPUA Board Meeting Minutes March 2010

Cape Fear Public Utility Authority could spend up to $84,660 on consultants for rate study

The Cape Fear Public Utility Authority could spend up to $84,660 on consultants for its newest rate study. The bids are in and information provided by the CFPUA purchasing department showed a total of 7 firms submitted quotes ranging from $42,900 to a nearly $85,000.

Bid totals were as follow:

Consultant / Total Cost
AUS / 42,900
Municipal & Financial Services Group(MFSG) / $ 44,200
Utility Advisors’ Network, Inc / $ 48,000
Raftelis Financial Consultants, Inc / $ 49,875
Burton & Associates / $ 53,928
CH2MILL / $ 79,500
Black & Veatch / $ 84,660

Municipal & Financial Services Group (MFSG) performed the Authority’s initial rate study and proposed the rate structure in place now. MFSG submitted the second lowest bid this time around coming in at $44,200. Their ongoing relationship with CFPUA makes them a likely front-runner to secure the study this time around as well. Their previous report is only two years old and it’s questionable what new ideas they might bring to the table.

Former CFPUA board member Kathryn Johnston wanted to see the board move away from spending money on consultants for rate structure input. With the decision to nearly double rates already in place there is concern the study will only serve as either a high priced propaganda piece to support the status quo, or a scapegoat on which to blame the impending rate increases.

It should be pointed out that some of the information requested in the rate study proposal is freely available online through organizations like The North Carolina League of Municipalities and the American Water Works Association.

The Authority will continue to move the bidding process forward holding rate study interviews December 6th, from 12:00 to 5:00pm, at their offices on Government Center Drive.

Report Shows CFPUA is Selling Water Below Cost

Budget Woes Continue

When the Cape Fear Public Utility Authority was created in 2008 it changed from a flat rate to an increasing tiered rate structure to bill for water consumption. The current tiers are $2.22, $3.35 and $4.50. A report given at the CFPUA July 2010 board meeting showed that water sold at the first tier of $2.22 is being sold below cost.

Exhibit 5-16 of CFPUA Financial Position Report dated June 30, 2010 shows the average cost of 1000 gallons of water is $3.01, which also represents what the equivalent flat rate would be. The problem is the Authority sells a majority of its’ water at $2.22 per 1000 gallons, or $.79 cents below cost.

At a recent meeting CFPUA Board Chairman Gene Renzaglia was quick to inform fellow board members that the price would have to be raised to keep from selling water below cost. Mr. Renzaglia previously justified the status quo stating that companies sell products below cost all the time.

Budget woes continue as the CFPUA cuts project and freezes employees salaries (all salaries except for CEO Matt Jordan who received a $22,500 pay increase.) A scheme that sells water below cost only compounds the organizations budget problems.

Almost since its inception, long time CFPUA Board member and County Commissioner Bobby Greer has lobbied to change the tiered rate portion of the rate structure. City Councilman Charlie Rivenbark, a more recent addition to the board, has expressed concern as well.

The irony is, with the CFPUA selling water below cost at the first tier, it relies on customers to do the very thing it claims it wants to discourage in order to balance the budget. Under the current rate scheme, the CFPUA needs customers to waste water, paying second and third tier rates, to make ends meet.

The Financial Position Report explained one of the board’s philosophies in forming the rate structure was that it was to encourage conservation. If the board believes a higher price (such as the third tier price of $4.55) encourages conservation, then by default it would agree a lower price encourages consumption. The question then is how does selling water significantly below cost encourage conservation? The answer is, it doesn’t.

The Cape Fear Public Utility Authority continues to take heat for its tiered rate structure on other fronts as well. Since its inception families have complained the rate structure is discriminatory. CFPUA internal reports back up the families claims showing it is indeed punitive to larger families, forcing them to pay 2nd and 3rd tier rates for essential water needs.

With project spending to possibly exceed half a billion dollars in coming years, CFPUA rates will continue to be in the headlines. According to the Authority’s own estimates, the rates it charges will nearly double over the next decade.

American Water Works Association Classifies CFPUA Water Rates Unfair

Some CFPUA board members agree. Leadership defends the status quo.

According to the The American Water Works Association(AWWA), the Cape Fear Public Utility Authority’s tiered water rates are unfair. For over two years families have complained to the 11 member CFPUA board they were being unfairly punished with higher rates. Now it appears the AWWA agrees.

The AWWA says tiered rate structures like the CFPUA’s can potentially be punitive to large families, charging them a higher prices when they may in fact be very efficient water users, and thus not deserving of a higher unit rate. It goes on to say tiered rates should not punish water usage where there is no discretion in usage. The CFPUA’s tiered rate structure fails that basic standard of fairness.

Under the CFPUA rate larger families can pay significantly higher prices while using the same amount of water per person. These families are forced to pay a premium even while conserving water. For example, a typical family of 2 or less would pay 1st tier rates of $2.22 for essential water needs. A family with 3 members, using the same amount of water per person as the family of 2, would pay 2nd tier rates of $ 3.36. Likewise, a family of 5 can easily the 3rd tier rate of $ 4.50 for basic water needs.

County Commissioner and CFPUA board member Bobby Greer understood the inherent flaws in the rate structure and has attempted to change it virtually since it’s inception. A more recent addition to the board, City Councilman Charlie Rivenbark, has expressed concern as well. Unfortunately, Greer’s attempts to change the rate structure have been thwarted under the current leadership.

CFPUA Board Chairman Gene Renzaglia defends the tiered rate structure. Treasurer Burrows Smith does as well. While larger families pay a premium for their most basic water needs, they’ll find little compassion from Smith. “They’re the ones that have the family. It’s their choice.”, he said.

Many water utilities have refused to implement tired rates because of the inherent problems. AWWA figures show utilities actually moving away from that type of rate structure.

The problem for those that defend the status quo is that after 2 years there’s no evidence the Authority’s tiered rate structure has even been effective in encouraging conservation, or at least no more so than an appropriately set uniform rate would be. While usage is down since the CFPUA was created, reports from both CEO Matt Jordan and former CFO Brett McAbee credit the decrease specifically to increased rainfall and a downturn in the economy, not the tiered rate scheme

It is significant that the foremost authority on water, The American Water Works Association, classifies the CFPUA’s tiered rate structure as punitive to larger families. According to AWWA standards, the Authority’s tiered rate is inherently discriminatory and unfair, punishing families with higher prices for their most basic water needs

The CFPUA’s current tiered rate structure is bad policy and it remains a stain on the integrity of this board. The American Water Works Association agrees.

It’s time to bring this form of government sponsored discrimination to an end.

CFPUA Seeks Consultant for Rate Study

The Cape Fear Public Utility Authority issued a request for proposal November 1st looking for help with their rate structure. According to the proposal, ‘The overarching goal of the study is to adequately fund water and sewer operations, capital improvements costs and bond debt while at the same time keeping rates low.”

When the CFPUA was created just over two years ago rates were changed from a uniform water rate to a tiered rate structure. Since then families have complained about the punitive nature of the tiered rate structure with some board members agreeing. For this very reason County Commissioner and CFPUA board member Bobby Greer has attempted to change the rate structure since its inception. However, Commissioner Greer’s proposals and customer complaints have fallen on deaf ears of the current CFPUA leadership. It’s not likely another rate study would result in any meaningful change.

Former CFPUA board member Kathryn Johnston wanted to see the board move away from spending money on consultants for rate structure input. She saw it as a waste and believed staff was capable of handling rate issues. A review of CFPUA minutes would seem to agree with Ms. Johnston’s conclusions. Just one year ago in November of 2009, then CFO Brent McAbee gave an in depth rate presentation. CEO Matt Jordan did the same in July of 2010.

Skyrocketing rates are a growing concern as well. The study documents call for the consultant’s rate proposals to meet all the CFPUA spending demands while “keeping rates low.” How can consultants recommend ways to keep rates low when the CFPUA has already informed customers that rates will nearly double over the next decade?

With the decision to nearly double rates already in place, it seems as if the study will serve as either a high priced propaganda piece to support the status quo, or a scapegoat on which to blame the impending rate increases.

Much of the information requested in the proposal is freely available online through organizations like The North Carolina League of Municipalities and the American Water Works Association.

Municipal Services Financial Group performed the Authority’s initial rate studies and proposed the rate structure in place now. They’d likely be a front-runner to secure the study this time around as well.

Candidates Call for Shake-Up at CFPUA

Some see restructuring and a change in leadership as part of the fix 

They may come from different parties, but they all agree on one thing: There is a need for change at the Cape Fear Public Utility Authority. New Hanover County Commissioner candidates have discussed everything from sky rocketing rates and spending, to the complete reorganization of the struggling utility.

Each of the candidates is quick to explain they understand there are things that need to be fixed in the aging water and sewer infrastructure. They also agree the spending and rate increases have got to be brought under control. Three of the candidates, Berger, Butler, and Catlin have each stated they want seats on the Authority board if elected.

Brian Berger is one of the most outspoken candidates on the Authority. He warned citizens of potential problems with the authority in 2007, long before it was ever created. In hindsight, his insight now seems somewhat prophetic. Ultimately Berger would like to see the Authority dissolved but comments that may not be possible at this point.

This past week Deborah Butler called for the removal of CEO Matt Jordan during an interview on the a local radio show The Morning Beat with Chad Adams.  NHC Commissioner Chairman Jason Thompson has called for Jordans removal as well if the situation does not improve.

Butler is also an outspoken opponent to the Authority’s tiered rate water structure, which is punitive to families. Authority reports back up Butlers concerns. 

Butler’s website had the following statement on the CFPUA: “…the merger that created the CFPUA was not properly supervised by the County Commission resulting in delinquent billing, disruptive Landlord/Tenant policies, and unrecoverable accounts receivable. Further, the rates have dramatically increased while the CEO is receiving “incentive” monies. Meanwhile, parts of the County still don’t have the sewer service they were promised years and years ago and the infrastructure continues to fail contaminating our environment.”

Rick Catlin believes the CFPUA should be dissolved and completely restructured if possible. Catlin has also stated the current rate of spending and price increases is unsustainable.

Catlin’s website had the following comments on the CFPUA: “I do not believe the Authority is sustainable. They have no way to pay for decades of deferred maintenance except through higher and higher usage fees. The Authority exists outside the traditional concepts of accountability and will continue to struggle to maintain and expand basic public health services as a self-sufficient utility enterprise. I believe clean water and sanitation are basic responsibilities of local government. We need to make substantive changes to the Authority.”

Sid Causey is one of the more reserved candidates when it comes to the CFPUA. But even Causey expressed concerns over the utility rates running people out of the county.

Accountability of the CFPUA to the citizens, or lack there of, is a common concern. When the authority was created, control of water and sewer utilities were handed from officials who were elected to an appointed board. Citizens found themselves being governed by a government corporation, with little or no voice in its direction or decisions making.

The candidates concerns are well founded. The Cape Fear Public Utility Authority was created under NC General Statute 162A. Under that statute the Authority is given the unregulated ability to spend money and raise rates. It is also exempted from oversight by the North Carolina Utilities Commission.

Voters will decide on November 2nd who their new county commissioners will be. The face of the Cape Fear Public Utility Authority will change soon there after.

WATCHDOG Group Calls for Cape Fear Public Utility Authority to Televise its Meetings

In light of recent events, board should make transparency a priority

During the public comment portion of Wednesday’s Cape Fear Public Utility Authority board meeting a formal request was made for the CFPUA to televise its board meetings.

The presentation made three specific requests: That audio recordings of all past CFPUA board meeting be made available online, that CFPUA begin filming and broadcasting meetings, and that meeting videos with associated meeting documents be made available on line.

The presentation cited several reasons that the authority should film its meetings. The first reason was that the CFPUA written minutes were subjective and contained errors. The presentation went on to point out errors and omissions in existing CFPUA meeting records. It also highlighted cases where customer concerns expressed during the public speaking portion were relegated to one sentence, but appearing in the same minutes was a whole paragraph written about an award given to the board chair.

Secondly the presentation pointed out that the two bodies that created the CFPUA, the Wilmington city council and New Hanover County Commission, both film and broadcast their meetings, and that the CFPUA should be held to the same standard. It recommended using the Wilmington City Council website as a model for posting videos and meeting documents.

Finally the presentation explained that as a result of the creation of the CFPUA we find ourselves being ruled by a government corporation; an appointed board with the power of elected officials. With the creation of these authorities, the state legislature has essentially allowed for the birth of an unregulated spending monster, obligating citizens of New Hanover county to hundred of millions of dollars in debt.

Under the guise of “it’s broken and we have to fix it,” there is virtually no spending the CFPUA can’t justify. According to 2010 data from the North Carolina Association of County Commissioners, the Cape Fear Public Utility Authority spends more money than 70% of the counties in the state of North Carolina. Board member and County Commissioner Bobby Greer has stated in the past that the board has to quit spending so much money.

CFPUA minutes show that in February of 2010 there was some discussion regarding broadcasting authority meetings. Several members were in favor of the idea at that time. Former board member Kathryn Johnston stated that transparency and openness was a concern. Six months later it is evident that this is not a priority and there has been little progress toward that end.

Citizens can hold city council and the county commission accountable at the ballot box. They can not do the same with the appointed members of the CFPUA board, regardless of the public’s dissatisfaction with their direction. This authority is an unelected, unaccountable, government body. It represents a fundamental change in how we are governed and is truly taxation without representation.

The CFPUA should be held to the highest standard of openness and transparency and this board should willingly offer video recordings of their meetings, including meeting documents, available on line for the public’s review.