Industries’ water rates rising

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January 2, 2009

BY MIKE FAHER The Tribune-Democrat Fri Jan 02, 2009, 11:39 PM EST

When Cambria Somerset Authority purchased five area dams in 2000, economic development was a primary goal.

But the authority continues to struggle to find new water customers, and it requires annual cash infusions from both counties simply to stay afloat.

Now, the authority’s existing customers are feeling the pinch in the form of a 20-percent rate hike taking effect this month.

“Rest assured this decision was made only after reviewing all possible cost-cutting measures,” authority Operations Manager Tom Kakabar wrote in a letter to customers.

The authority, which owns Quemahoning, Wilmore and Hinckston Run reservoirs as well as two smaller dams, sells water in bulk to about a dozen customers.

And for some, a 20-percent rate increase adds up to tens of thousands of dollars.

Greater Johnstown Water Authority administrators, who are contractually obligated to buy 1 million gallons of water daily from the Quemahoning, expect their CSA bill to rise by about $30,000 this year.

Greater Johnstown has not increased its customers’ rates since 1998.

But board Chairman Ed Cernic Sr. said the authority is “running on a shoestring budget,” and he said officials may not be able to absorb an additional $30,000 in expenses.

“Unless we find a different way of taking care of that increase, we’ll probably have to raise our rates,” Cernic said.

Two other large CSA customers – both Johnstown businesses – also will see their water bills rise significantly.

Based on their 2008 water purchases, a 20-percent rate hike will mean an additional $31,000 for Gautier Steel Ltd. and nearly $28,000 for Johnstown Wire Technologies.

Representatives from those companies could not be reached for comment.

The increase also will be felt in Somerset County, where the long-awaited, $25 million Quemahoning Pipeline project is scheduled to go online soon.

But county Commissioner Jim Marker said the pipeline’s five committed municipal customers should not worry: Their rates will not rise accordingly.

In fact, Marker said, the county has maintained a promised water rate of $2.25 per 1,000 gallons even though the pipeline project’s price tag has grown by millions of dollars since it was conceived.

Marker said Somerset County General Authority will absorb the CSA increase “just as we’ve eaten the increases in the cost of the project.”

Jim Greco, Cambria Somerset Authority’s board chairman, said the Quemahoning pipeline is expected to provide about $150,000 in much-needed annual revenue for the authority.

But even with that boost and a cash influx from the rate hike, Greco does not expect CSA to be operating in the black.

This year, each county is expected to send $200,000 to help the authority maintain itself, he said.

It was not supposed to be that way when the authority was formed to buy the dams from a Bethlehem Steel Corp. subsidiary. Money from water customers was expected to provide sufficient revenue to pay down debt and support authority operations.

But in the same year that the authority formally took ownership of the dams, its biggest customer vanished when Johnstown’s Republic Technologies Inc. shut.

Since then, proposed power plants in Somerset and Cambria counties also went by the wayside.

“We’re just waiting for one big customer,” Greco said.

He added that recent attempts to find other revenues, including solicitations for wind turbines and natural-gas leases, have not yielded any results.

Still, there have been some positives for the authority. First and foremost, CSA has preserved and maintained critical water resources for its remaining customers.

And the authority has installed public recreation facilities at its three biggest dams.

That is most prominent at the Que, where a partnership with the nonprofit Summer’s Best Two Weeks has led to extensive recreational investment at no cost to CSA.

“Recreation at the Quemahoning is growing by leaps and bounds,” Greco said.

Greco, who has been involved with the authority since its inception, said he still believes it was the right decision for the two counties to purchase five dams.

Marker, who currently sits on the CSA board, agrees.

“It’s an investment in our future,” he said.

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