By Brandon Martin
The Henry County Public Service Authority (PSA) will be seeking relief from the statewide moratorium preventing the disconnection of utilities during the ongoing coronavirus pandemic.
If granted, customers with past-due bills could be subject to disconnection of water and wastewater services.
Tim Hall, county administrator and general manager of the PSA, said a provision in the moratorium would allow smaller providers to continue disconnections if certain financial metrics are met.
“The legislation includes protections of smaller utilities like the Public Service Authority that may experience revenue shortfalls because of the moratorium,” Hall said. When past due bills “exceed one percent of the annual operating revenues, the utility may seek relief from the moratorium.”
After performing a written analysis, Hall said the unpaid balances or arrearages exceed one percent of the PSA’s annual operating revenues.
According to the analysis, as of March 31, 2021, the unpaid balance was $196,176.88. The total operating revenues was $13,058,282, according to the fiscal year 2020 audit report, which means that one percent would be $130,582.82. The balance of arrears is $65,594.06 more than one percent of operating revenues.
“This makes us eligible to rescind this legislation,” Hall said. “Additionally, customers with delinquent accounts have been made aware of repayment options to allow them the opportunity to pay off back debt over a longer period.”
Although the PSA was not bound by rules from the State Corporation Commission, Hall said the guidelines were still followed to not disconnect services. Then the General Assembly passed legislation which “we enacted and by your actions just a few minutes ago, we were able to get from under that,” Hall said.
The county had previously donated $200,000 in Coronavirus Aid, Relief, and Economic Security (CARES) Act money to social services for county residents to pay bills from the PSA, AEP or natural gas providers.
“We got back nearly $168,000 which still kind of surprises me,” Hall said. “Very few people took advantage of that opportunity so we took that money back and reallocated it to some other COVID issues.”
In addition to passing a motion to continue with the process of seeking relief from the moratorium, Hall also updated the board on the fiscal year 2021-2022 budget.
To encourage customers to use the online payment system during the pandemic, Hall said the PSA waived the online transaction fee.
“The board took on the cost of absorbing that cost,” Hall said. “That’s been about $90,000 so far this year. That is a substantial amount of money but we are proposing in this next budget that we continue that policy, just because it’s healthy for our clients, our customers and our residents. It makes paying their bills easy.”
Hall added that negotiations are in place to reduce the fee associated with the service.
The proposed budget for the year is $12,635,578, according to Hall, who added the budget would be an increase of 23.8 percent from the previous year.
“Let me remind you that we did a budget last year, COVID hit, we threw that budget away and basically took out all of the discretionary spending out of that budget that we could,” Hall said.
For a more accurate comparison, Hall said the FY19-20 budget was $14,944,893, meaning that this year’s budget would still be $2,309,315 less than the budget was prior to COVID-19.
“We are not recommending any adjustments to the PSA rates,” Hall said. “Our last rate increase was 2013. I would challenge you to provide any utility provider who can say that. That’s a pretty good time to go without a rate increase.”
Chairman Gerry Lawicki asked if a rate study was expected in the “near future.”
“I think we will need one soon,” Hall said. “Whether that is this year, next year or the year after that. I think we have done a really good job of managing what we’ve got already but at some point, it’s inevitable that there will need to be a rate adjustment. When we do recommend a rate increase, a rate study is needed because we don’t want to just say ‘well we think it should be another dollar per 4,000 gallons.’ We need to have data that can communicate what that number should be.”
Lawicki also clarified that the PSA would not be precluded from receiving government assistance due to having low rates.
“Not at this point, that is correct,” Hall said. “I think we are okay but clearly since 2013, we’ve operated on the same amount of revenue. There probably needs to be some consideration of that in the near future.”
Currently, the PSA charges residential users $30 a month and non-residential users $45 a month based on 4,000 gallons/month. Institutional users pay $68/month based on 6,000 gallons a month.
“We did make a rate adjustment this year in the fall,” Hall said. “Frankly, we were not competitive in the recruiting of large water and wastewater users. We are finding ourselves left outside of those discussions on the county and the (economic development corporation) side.”
For this purpose, Hall recommended reduced rates for industrial users. The new rates would be $3.50 per thousand gallons for 500,000-749,000 gallons per day; $3 per thousand gallons for 750,000-999,999 gallons per day; $2.75 per thousand gallons for 1-1.9 million gallons per day; and $2.25 per thousand gallons for 2-3 million gallons per day.
“We are proposing a five percent raise for our employees,” Hall said. “This matches the request in the county budget for the county employees and it also matches the school system and compensation board employees that we have in the building.”
Hall added that PSA employees did not receive a raise last year and have received three percent only twice in the past seven years.
Looking forward, Hall said water sales revenue is projected to rise four percent and wastewater treatment revenue is projected to climb 3.6 percent.
“Again, this is prepared to last year’s bare-bones budget,” Hall said. “If you compare it to FY19-20, we are essentially flat in both of those revenue categories, if not down a little bit.”
There were some avenues to cut spending due to the pandemic, according to Hall.
“We didn’t travel at all last year for staff conferences or education because of the pandemic,” Hall said. “Quite frankly, I think we learned how to do it by staying here and doing Zoom calls or taking advantage of whatever online opportunities that we can find. So we went through the budget and slashed a lot of the travel and education cost centers because we don’t anticipate any uptick in that this year.”
The overtime budget was also reduced for meter readers due to the meter upgrades and the radio-read program.
In conjunction with the county, Hall recommends the PSA fund a shared position for a public information officer with each taking on half of the expenses.
“This position is ultimately added to the county site and we recommend it become a shared position” Hall said. “There is ample work for this person.”
Hall said with “24/7” media today, “I think it is in our best interest that we get out in front and try to provide that content and be proactive in guiding that message. Not that we will ever tell the media what to report. It’s not our job. We need to make sure they have the facts that they need.”
The position would also help the county address “a huge litter problem that we have in our community” Hall said. “Folks are pretty indiscriminate with tossing bags out or more likely, when they are hauling their bags to the convenience center, they don’t cover the bed and the bag falls out. The next car runs over it and the next thing you know it’s scattered in the wind.”
For the PSA, Hall said the position could “be proactive with community meetings if there is a need for water or wastewater discussion. They would also be the face for any media contact for any day-to-day news items that come.”
The public information officer would report directly to Hall or Deputy County Administrator Dale Wagoner.
There are approximately $2.3 million in capital improvement items including $425,000 for the Lower Smith River Transfer Switch Replacement, $200,000 for sludge removal, and $214,000 for assorted valves, grinders, etc.
The PSA continues to have ongoing issues with the City of Martinsville, according to Hall.
“We continue to talk with the City of Martinsville, or be party to the discussions with the county, on reversion,” Hall said. “A key part of Martinsville’s reversion strategy is for the PSA to give into the city’s demands, including not reopening the Lower Smith River treatment plant and making a significant payment from the PSA to the city for the city’s repairs on the collapsed sewer line.”
Hall said the county sees reversion “as a city-county issue” and “the PSA is not a county department.” He added that he expects the discussions to be ongoing for the next 12 months or “possibly many more after that.”
In an unrelated matter, Hall said the PSA has experienced “some severe inflow infiltration issues this year.
“Basically, that is when outside wastewater gets into your system either through significant rain events or some other events,” Hall said. “We’ve fought that battle all year. I’m not sure that we ever won it. One of the reasons that we want to get a handle on that is that the more inflow we have to our system, the more we pay to the City of Martinsville to treat it. If we can reduce the amount of inflow infiltration that goes into the sewer system, that’s less money we pay to the City of Martinsville to treat it.”
To help with the issue, Hall said staff is looking to hire two additional personnel “to get out and walk our sewer lines and make it easier to walk the sewer lines by getting better access to those lines.” With better access, Hall said “you can see where the inflows are coming in” and take “remedial action.”
Further details on the budget will be discussed at the budget work session scheduled April 26 at 5:30 p.m.
In other matters, the board:
*Heard an update from Finance Director Darrell Jones.
*Passed a resolution to apply for funding for Phase IV of the Fieldale Lead Service Project. The project calls for $500,000 from the Virginia Department of Health to complete the phase, Hall said.