Wednesday, June 29, 2022

Are CFPUA ratepayers willing to pay $215 million for Sweeney upgrades?

When CFPUA polled 250 ratepayers, over half said they didn't want to pay anything for the upgrades, and only about a quarter were wiling to pay the increases proposed by CFPUA. So, will the public get a say? And if Chemours pays up, will the public get a refund?

CFPUA’s Sweeney Water Treatment Plant could receive a major upgrade. But so far, public involvement in the decision has been limited, despite the very real possibility that ratepayers will foot the $215 million bill over the next three decades. (Port City Daily photo / File)

NEW HANOVER COUNTY — The Cape Fear Public Utility Authority is planning major upgrades to its Sweeney Water Treatment plant, costing $215 million over the next several decades. Many agree that action is needed to address emerging contaminants, but are residents getting a say in the process?

Projects like this are typically undertaken by local government, which means public hearings, a vote by elected officials, and often voter referendums, take for example Wilmington’s 2016 Parks Bond or 2014 Transportation Bond.

But while CFPUA is a governmental body, it’s run by appointed – not elected – officials, although some board members also serve on Wilmington City Council and the New Hanover Board of Commissioners). Further, CFPUA can sell bonds to finance the project and repay them by increasing rates; no public referendum is required.

So, while it seems clear that removing emerging contaminants from the drinking water is a concern for many, how will CFPUA gauge whether or not — and how much — its ratepayers are willing to pay for the upgrades?

So far, the only direct “gauge” of ratepayer support for the plan has been a survey of just 250 ratepayers, a fraction of the total, taken over the summer. Over half of the survey participants said that, despite being concerned about GenX, they weren’t willing to pay more on their CFPUA bills. Another significant portion of responses said they would pay, but only up to half of what CFPUA plans to charge.

Further, CFPUA’s approach to the issue, upgrading its Granulated Activated Carbon (GAC) isn’t the only option. It’s possible that residents would be willing to be pay more for different technology; that’s the course of action being taken across the river, where Brunswick County is pursuing the more-expensive Reverse Osmosis (R/O) filtration technology.

Lastly, CFPUA has suggested that at least some of the upgrade costs could be recouped from a state grant and federal litigation against The Chemours Company. So, if residents end up paying the upfront cost, could they see a refund down the road?

Port City Daily spoke with CFPUA about the real-world cost of the planned technology, its effectiveness and lifespan, and how public opinion is being factored into the utility’s plans.

Cost: $46 vs. $215 million

Much of the coverage of CFPUA’s planned upgrades has focused on the capital cost, the $46 million it will take to install new GAC filters at the Sweeney Water Treatment Cost.

The full cost of the project is estimated at $215 million dollars. This figure, known as the “net present value,” factors in the capital cost, the $2.9 million annual operating costs over the project’s estimated 34-year lifespan, interest on funding loans, and other smaller costs.

Those operating costs include the need to address issues with the GAC system, namely the need to replace the filter medium – as they lose their ability to filter more than 90 percent of PFAS after around 400 days (by the 800-day mark, GAC filters can only remove about 50 percent of PFAS). The filter media will be removed, taken off site, and “thermally oxidized” (i.e. the carbon granules will be burned to remove the contaminants they have absorbed).

According to CFPUA, this process allows PFAS to be destroyed; it also addresses the issue of “desorbtion,” whereby PFAS absorbed by the filters can actually be released back into the drinking water.

CFPUA estimates the average ratepayer will see a $5 increase on a monthly bill from 2020 to 2054. It’s worth noting that CFPUA also estimates that overall rates will also increase, irrespective of whether or not upgrades are made, by about $4.50 a month by 2030.

Are residents willing to pay? And how much?

The results of CFPUA's ratepayer survey, conducted over the summer: over half said they weren't willing to pay anything for upgrades, and only around a quarter said they would be willing to pay in the range of what CFPUA has proposed for rate increases. (Port City Daily photo / CFPUA)
The results of CFPUA’s ratepayer survey, conducted over the summer: over half said they weren’t willing to pay anything for upgrades, and only around a quarter said they would be willing to pay in the range of what CFPUA has proposed for rate increases. (Port City Daily photo / CFPUA)

CFPUA spokesman Vaughn Hagerty cited an online survey of 250 participants, a fraction of the utility’s total ratepayers, that CFPUA conducted over the summer.

Hagerty acknowledged the study was “unscientific,” but pointed to some general results, including that “48 percent were willing to pay up to $20 extra on a bi-monthly bill to upgrade Sweeney.”

That figure is a little misleading — the actual responses show that only a small fraction were willing to pay $20 bi-monthly.

Over half of the responses said they would pay nothing, and about a sixth said they would pay as little as 50 cents and no more than $2.50 monthly. Another sixth said they would pay between $2.50 and $5 a month.

The survey does show that the majority of people are concerned about the issue of emerging contaminants.

“Arguably, one could interpret that as saying people want something done about it; they just don’t think they should pay for it. For now, Chemours isn’t stepping forward to make good on the problem it caused. That’s why we’ve filed a federal lawsuit. In the meantime, we believe we need to move forward to address an issue almost 9 out of 10 people say they are concerned about,” Hagerty said.

The issue of “who pays” is a crucial part of the puzzle: it seems few residents would object to repairs paid for by Chemours (a company beloved by very few in the Cape Fear region).

But what about a state grant which would, essentially, stick taxpayers with the bill for cleaning up Chemours’ pollution, albeit with the impact spread across the state instead of solely on CFPUA ratepayers — how does the public feel about that?

“As I’m sure you realize, it’s pretty much impossible to accurately address this without taking into account the question of who should pay for those upgrades,” Hagerty said.

Hagerty said CFPUA could “unhesitatingly answer” that “an overwhelming majority of our ratepayers believe all costs to address PFAS compounds in drinking water sourced from the Cape Fear River should be borne by Chemours, the chemical manufacturer whose decades of undisclosed discharges have affected our river and our drinking water and will continue to affect it even after Chemours takes the steps forced on it after months of wrangling with regulators.”

What about a refund?

CFPUA’s financial calculations include three scenarios: (1) no upgrades, (2) upgrades paid for by ratepayers, and (3) upgrades with “full cost recovery” in Fiscal Year 2024.

In the most optimistic scenario, where CFPUA recovers its costs from a lawsuit against Chemours, ratepayers will have already paid a premium for three or four years. Since CFPUA has been adamant that its ratepayers shouldn’t have to foot the bill, will they get a refund?

The answer: it’s complicated.

“That’s a great question and one our customers already are asking us,” Hagerty said. “While the answer might seem simple — just send everyone a check — it becomes far more complicated when you start thinking about all the other answers required to decide not only what’s right for ratepayers but what’s even possible.”

Hagerty said possible complications faced in this type of scenario could include when a settlement agreement with Chemours was actually reached, how much it would be for, and how the payment(s) would be structured.

Hagerty added that there were other specific issues for CFPUA, including keeping track of the customer base, and whether CFPUA might need potential settlement money for something else besides a refund to ratepayers.

“Then there are questions specific to CFPUA,” Hagerty said. “How has our customer base changed since the settlement – how many left the system and how many joined? Did any other major, critically urgent capital needs arise in the meantime? How much is still owed to bondholders who financed the Sweeney upgrades?”

Ultimately, Hagerty noted, any decision on whether or not to issue refunds would be up to CFPUA’s appointed board, but there’s no clear answer at the present time.

“Ultimately, of course, the CFPUA board would decide. It’s perfectly reasonable that our customers would be asking this question but right now, there are far too many uncertainties to provide a definitive answer,” Hagerty said. “Whatever we do, though, we want to do the best possible thing for our ratepayers.”

Other options: Reverse osmosis, ion filtration

A cost analysis of Granulated Activated Carbon upgrade to Sweeney Water Treatment Plant versus a Reverse Osmosis system. (Port City Daily photo / File)
A cost analysis of Granulated Activated Carbon upgrade to Sweeney Water Treatment Plant versus a Reverse Osmosis system. (Port City Daily photo / File)

CFPUA’s decision to choose GAC over two other potential methods – Reverse Osmosis and ion filtration – has already been made, and is unlikely to change at this point. The decision, as CFPUA has addressed in the past, came down both to cost and the issue of what do to with contaminants removed from the water.

In the wake of revelations about GenX, Brunswick County began plans for its own R/O plant. The plans are costly, nearly $100 million for the plant alone, and another $100 million or more for necessary expansions — and that’s to serve a population of less than half of New Hanover County’s.

Brunswick’s plant will now have to deal with the issue of concentrated waste-water. Brunswick County’s plant relies on state approval by the Department of Environmental Quality and, although the county is moving ahead, approval has not yet been granted.

CFPUA crunched the numbers, estimating that building a R/O facility to serve New Hanover County would involve a real world cost of half a billion dollars, over twice that cost of GAC. According to CFPUA, although GAC doesn’t produce quite the same results as R/O, doubling the cost, combined with potential issues with getting a wastewater permit, didn’t make sense.

CFPUA also considered ion filtration, but again ran into disposal issues for PFAS removed from the water. However, CFPUA noted that if needed the planned GAC system can be adapted to include ion-exchange filter elements.

Public Input

According to Hagerty, CFPUA will eschew additional, larger-scale surveys in favor of “an extensive effort to meet with people in the community face-to-face so that we can listen to their concerns and answer questions.”

Hagerty said, “We could do other surveys, but we believe this sort of personal outreach will provide a better measure of community support and help provide some clarity on what for many people is a very complex issue.”

CFPUA is in the process of identifying groups to reach out to, according to Hagerty, adding that any group interested in a meeting can contact CFPUA at communications@cfpua.org or call Hagerty himself at 910-332-6704.


Send comments and tips to Benjamin Schachtman at ben@localvoicemedia.com, @pcdben on Twitter, and (910) 538-2001.

 

 

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