OKLAHOMA CITY – State regulators approved a revised rate schedule for Tenkiller Waterworks Inc., a privately owned company in Cherokee County, after what were described as “robust settlement discussions that spanned several days.”
Oklahoma Corporation Commissioners Kim David, Todd Hiett and Brian Bingman endorsed the compromise agreement unanimously on June 4.
Tenkiller Waterworks (TWW), which is owned by U.S. Water Services Corp., was operating on rates established 13 years ago and initially proposed a staggering rate hike of 84% phased in over three years. However, the settlement agreement included various changes to TWW’s original proposals.
• TWW requested an annual revenue increase of $86,676. After negotiations involving the state Attorney General’s office, TWW, and the Corporation Commission’s Public Utility Division, the annual revenue increase was shaved by 32% to $58,985.
• The residential service fixed charge was increased from $36 previously to $39.26 per month going forward. However, that was 31% less than the $56.94 per month that the company had requested.
• Water consumption charges were set at: --0-4,000 gallons: $9.36 per 1,000 gallons.
Approximately 70% of TWW’s customers fall into that usage category, Rendell said. The utility’s customer base is “more weekend and seasonal occupancy.”
A customer who uses the bare minimum of 1,000 gallons of water per month has been paying $36; under the new rate schedule the bill will be $48.62. In TWW’s original proposal the water bill would have been $61.25 per month in Year 3.
Approximately 30% of TWW’s customers used 1,000 gallons or less during the 12-month period ending May 31, 2024, Rendell wrote in testimony prefiled with the Corporation Commission.
A customer who uses 4,000 gallons of water per month will be charged $76.70. TWW initially proposed charging that customer $117.65 per month in Year 3.
--4,001 to 10,000 gallons: $14.04/1,000.
A TWW customer using 5,000 gallons of water each month has been charged $60.75, the company reported. The new rate will be $90.74. That’s still less than the $145.85 that the company initially proposed to charge that customer in Year 3.
A customer using 10,000 gallons of water per month has been paying $92; under the new rate schedule the bill will be $160.94. The monthly charge would have soared to $286.85 in Year 3 of TWW’s original plan.
--Usage exceeding 10,000 gallons of water per month will be charged at the rate of $18.72/1,000.
• The company’s return on equity was reduced from the current 10.25% to 9.25%.
• The commission authorized a capital structure of 100% equity and zero percent debt.
• TWW was allowed to recover $13,035 in expenses it incurred in the rate case, but they will be amortized over three years in a $1.05 per month “rider” (a surcharge). After the company recoups those expenses the rider will cease.
• The Tenkiller Waterworks rate base was set at $454,215.
• TWW “agreed it will follow all Commission rules relevant to customer deposits.”
TWW “will review its policies and procedures to ensure that its administration” of these regulations complies with the state agency’s rules “and that any discrepancies will be remedies and realigned,” vowed Troy Rendell of U.S. Water Services, vice president of investor-owned utilities. Fees established
• The service initiation fee will be $15.
• The tap fee will more than quadruple, from $300 to $1,300, because the latter is the average cost for installing new connections to the water system, Rendell said. That task involves excavating, locating the water main, installing a saddle and corp stop, and installing a meter box and water meter, he said.
A ‘saddle’ is a fitting used to create a branch connection or tap-in to an existing water main. A ‘corporation’ stop is an important part of the water service lateral and is considered the initial control valve of the service line. The sole purpose of a corporation stop is to allow for installation of a new water service line without interrupting the water main pressure.
Raising the tap fee “ensures that the cost causer is paying for the expenses incurred by TWW and that existing customers do not subsidize new customers,” Rendell testified before a Corporation Commission administrative law judge (ALJ).
• The reconnection fee will more than double, from $25 to $57, to cover actual expenses incurred to disconnect and reestablish water service to a customer, Rendell said.
• The seasonal reconnection fee will be the minimum monthly charge times the number of months the customer was off the system, but not to exceed the minimum charge times 12 months.
That fee is needed because TWW’s customer base is “seasonal in nature, in which many customers occupy their residences on a seasonal basis,” Rendell said. The fee is “meant to ensure that seasonal residents pay their fair share of the water system,” because TWW must maintain its entire water treatment and distribution system yearround “regardless of a customer’s water consumption.”
• TWW’s late payment charge was set at 1.5% of the unpaid balance, consistent with the Oklahoma Administrative Code.
• The returned check fee was increased by one-third, from $15 to $20. That amount will be applied to the customer’s next monthly bill for each check returned by a bank for insufficient funds.
Tenkiller Waterworks serves Park Hill area Tenkiller Waterworks serves the Park Hill area south of Tahlequah. The water system is located on the east side of Lake Tenkiller.
TWW has more than 510 meters/connections but serves “about 340 customers, who are mostly residential, with many being seasonal customers based on their usage patterns,” Rendell told the ALJ. TWW also furnishes water to approximately a dozen customers in Indian Hills Estates, Rendell told Southwest Ledger last December. TWW “does not service Burnt Cabin,” he added.
TWW’s rates at the time of the Corporation Commission filing last year were based on the finances in 2012 of its predecessor, Tenkiller Utility Co.
U.S. Water Services Corp., based in New Port Richey, Florida, bought the Tenkiller- area water and sewer systems from Southwest Water Co. of Sugar Land, Texas, d/b/a Tenkiller Utility Co., for $322,455, Oklahoma Corporation Commission records reflect. The agency approved the asset transfer on June 3, 2020.
Tenkiller Waterworks is one of five investor-owned water utilities doing retail business in this state that are regulated by the Oklahoma Corporation Commission.
U.S. Water Services took over operation of the Tenkiller water system in 2020 after the commission approved acquisition of the system from Southwest Water Co.
The company’s operation and maintenance expenses have increased approximately 6.5% since 2021, their first full year of operations since acquiring the water utility, Rendell reported last year. TWW “has experienced significant increases in both chemicals and purchased power utilized” to treat the water it provides to its customers.
Rendell said TWW has invested more than $250,000 in its system in the last five years and has upgraded its customer billing software.
Tenkiller Waterworks has invested almost $167,000 in its physical plant since it bought the utility, he said. “It is believed” that the water treatment plant, which is located in the Tenkiller Harbor subdivision, “was built sometime in the 1980s,” he said.
Lake Tenkiller Harbor is a lakeside community located approximately 22 miles from Tahlequah.
TWW said its rate hike request included “new plant items that are in the process of being installed” in order to “ensure the continued delivery of potable water.” Rendell told the Ledger that the TWW rate hike application filed with the Corporation Commission contained a new lake pump, a new service pump, and replacement of fencing.
TWW’s application did not include plans for a new water tank; company officials “elected to remove it from its filing until further information is obtained,” Rendell told the Ledger last December.
During a Sept. 28, 2024, meeting of the Lake Tenkiller Harbor Owners Association, Rendell discussed plans for a new, 90,000-gallon ground storage tank for TWW customers. An engineering contract “has been signed to move forward with the design” of that tank, and the company will solicit competitive bids on its construction, Rendell told the Ledger.
TWW has no wastewater treatment plant; effluent is pumped to a sewage lagoon, Rendell said. Customer complaints More than 250 customers of Tenkiller Waterworks Inc. filed complaints and submitted letters of opposition to the Corporation Commission shortly after Oklahoma City attorneys Dustin Murer and Ron Comingdeer submitted to state regulators on Sept. 20, 2024, a “notice of intent to file an application for a general rate change” on behalf of Tenkiller Waterworks Inc.
For example, “The water is brown and unusable,” two customers wrote. “Residents have reported problems such as discoloration, an unpleasant odor, and irregular water pressure,” said another. Also reported were inconsistencies in the chlorine levels “at different areas of the neighborhood (some too low and some well over legal limits).”
“[M]uch of the public comment is related to the condition of the water system” when U.S. Water Services acquired it, Rendell testified.
Southwest Ledger emailed questions to Rendell last week about the water storage tank and complaints about discoloration of treated water from the company’s water plant, but received no reply.