With Chatham and New Berlin poised to vote on whether to build a new water plant, Springfield’s City Water, Light and Power says Chatham hasn’t responded to CWLP’s attempts to keep the village as a water customer.
Officials at CWLP also raised concerns about the South Sangamon Water Commission’s ability to pay off construction debt if the commission sets a wholesale water price of $4.65 to $4.80 per 1,000 gallons. The plant is projected to cost $24 million.
Chatham officials said they trust the conclusions of experts working on the project, such as investment firm Edward Jones, the Illinois Finance Authority and the water project consultants.
They also say they rejected a water contract offer from CWLP, which was delivered to the village in September, during an open public works committee meeting.
Water plant engineers and consultants last week gave the New Berlin Village Board their recommended water rate per 1,000 gallons. The Chatham Village Board’s public works committee will hear the same presentation at 6 p.m. today.
Both boards will then have enough information to decide whether to commit to the water plant project. New Berlin trustees could vote Wednesday. Chatham is expected to vote March 23.
CWLP: Rushed decision
CWLP officials say the villages are rushing into a decision.
“If the village of Chatham wants its own water supply separate from Springfield at any cost, at any risk, then it’s their right to have that, said CWLP finance director Craig Burns, who attended last week’s presentation in New Berlin. “We’re not trying to say they can or they shouldn’t.
“We’re trying to say we’ve seen this information, and we have concerns as the greater community of the Springfield area and Sangamon County as a whole.”
During last week’s presentation, Burns said, a consultant indicated that debt service for the water plant project would require charging $8 to $9 per 1,000 gallons over 30 years. However, he said, the $4.65-$4.80 rate, even if it increases 1 percent per year, as projected, would come only to $6.21 per 1,000 gallons during year 30.
Burns said that leaves $45 million in debt service expenses unaccounted for.
“That’s fine if they want to show they’re competitive with Springfield in the beginning, but where’s it (the rate) really going, I think, is a curiosity,” said CWLP water division manager Tom Skelly.
Chatham village manager Del McCord, Chatham’s representative on the water commission, said the $8 to $9 per 1,000 gallons figure was not part of the presentation.
Edward Jones’ figures showed that a $4.65 water rate, with the rate increasing 1 percent per year and water usage increasing 2 percent per year, would generate enough money to pay off the bonds.
“I’m certainly not equipped to argue with the financial experts,” McCord said.
He and Chatham Village President Tom Gray also questioned whether they’d be able to obtain financing for the plant if millions of dollars were unaccounted for.
Chatham officials also took issue with CWLP’s accusation that Chatham has rejected its negotiation attempts.
Draft contract
In September, CWLP officials said a draft water contract was hand-delivered to Chatham’s village office.
The 50-year proposal would: remove a boundary line provision that exists under the village’s current contract with CWLP and provide 4 million gallons of water per day to the village at an initial rate of $4.639 per 1,000 gallons. That figure already includes a rate increase for CWLP’s pump house project and other system improvements.
CWLP chief utilities engineer Eric Hobbie said CWLP never received a response to the offer. Hobbie also took issue with some Chatham officials’ assertion that the utility hasn’t made them a specific offer.
“We have not negotiated in detail. We’ve sent them contracts. We’ve sent them offers, we’ve answered their questions directly to them,” he said. “If Chatham said, ‘We’re not going on our own because it’s the right thing for our future,’ we’d say it’s their choice. But then they blame us for not negotiating.”
Gray said CWLP’s draft contract was rejected during a public works committee meeting in September. He said Chatham wants a water rate based on CWLP’s production costs and does not want a usage limit.
“If their point is Chatham did not formally reject their offer in writing, we believed by talking about it in a public meeting with the press sitting there, that was enough to get that information out to the public, since we do our business in public meetings,” McCord said.
“We want to get the best product for the best cost for the citizens of Chatham.”
CWLP prepared to absorb loss
CWLP officials say though they do not want to lose Chatham as a water customer, they are prepared to absorb the loss.
“When we did our financial projections for our recently approved infrastructure program, we issued the first set of bonds, we did a rate increase, and all of those financial projections assumed Chatham was gone when their contract expired,” CWLP Finance Director Craig Burns said. “Because of all the things Chatham was doing, we didn’t feel we could go to rating agencies and assume we were going to keep Chatham forever.”
CWLP’s new power plant, the Dallman 4 power station, uses large amounts of water, which would partly compensate for the loss of Chatham as a customer, officials said.
Amanda Reavy can be reached at 788-1525.
Read the original article from The State Journal-Register.
