FROM STAFF REPORTS

CHELSEA – The Chelsea City Council will vote at its meeting on Tuesday, Jan. 22, on a rate structure and control agreement with the owner of a sewer system that serves the city.

City officials have been concerned about current commercial sewer tap and line extension fees hampering the city’s economic growth, and residents have been dissatisfied with the monthly service fees and the rapid rate of increases between 2009 and 2016 implemented by the previous owner of the sewer system, according to information provided by the city of Chelsea.

The City Council approved a resolution on July 10, 2018, authorizing Mayor Tony Picklesimer to proceed with potential condemnation of the sewer system and to negotiate the purchase of the system from the new owners.

“The objective to purchase the sewer system was to provide essential, affordable service to its residents and to allow the city to grow commercially through reduced impact fees and line extension fees,” the release read.

Richard Rich, chief operating officer of Southwest Water Company, which purchased Shelby Ridge Utility Systems LLC in April 2018, reached out to Picklesimer in an attempt to reach an agreement and avoid legal costs to both parties associated with any condemnation action by the city, according to the release.

“SWWC is looking forward to continuing to work with Mayor Picklesimer, the city, and the community to ensure the city of Chelsea continues to be a great place to live and foster economic growth for many years to come,” Rich said in the release.

The proposed agreement would be effective immediately for a 10-year term with an option to renew and would:

• Freeze utility rates of customers of the SRUS system through January 2021 (five years since the last rate increase in 2016).
• Limit future adjustments of the SRUS monthly fees and reservation fees to “reasonable parameters.”
• Reduce the reservation fees for certain categories of future commercial customers.
• Eliminate lateral service line extension fees up to 100 feet for all types of commercial business.

The city would review rates annually and ensure that rate adjustments are supported using a return on equity calculation used by the Alabama Public Service Commission to regulate other utilities.

The PSC currently has not jurisdiction over private sewer systems of the size of the SRUS.

The settlement between Chelsea and Southwest Water is the result of extensive efforts by both parties over several months, the city’s release read.

“By entering into the settlement agreement with SRUS, the city of Chelsea will be able to secure our objectives of ensuring the provision of cost-effective utility services for Chelsea’s citizens and making Chelsea more attractive to incoming commercial or industrial customers,” Picklesimer said in the release.

Officials from SRUS, including Rich, are expected to attend the Council meeting on Jan. 22 at Chelsea City Hall.