Picayune attempts to rid itself of Dixie Utilities

Published 1:27 am Sunday, April 13, 2008

As the City of Picayune attempts to rid itself of the problematic Dixie Utility system residents continue to deal with substandard water and sewer services.

Dixie Utilities has been under two receiverships post Hurricane Katrina, but the system was in a failing state long before that historic day. Since then entities who came under receivership of the system have lost money.

In a Chancery Court hearing Friday, presided over by Chancery Court Judge C. Dale Jr., evidence was presented pertaining to the current condition of the system and its financial instability.

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Mississippi Public Service Commission attorney Lynn Carlisle said two weeks after the storm the commission received word that customers served by Dixie Utilities were without water and sewer services. After seeking a receiver for the company, the commission found Florida based Bell Utilities to take it over. Bell Utilities made some repairs to the system through a Hattiesburg subcontractor, Complete Environmental, but both companies lost money. Two months into their receivership Bell Utilities asked to be relieved.

Picayune was then approached by the Commission to assume receivership under the promise that grant funds would be available to offset maintenance costs. City Clerk Amber Hinton said during her testimony that the city spent about $50,000 to apply for a grant, which was denied.

Since the city’s receivership $177,628.59 of general funds have been spent on the system. Those funds went to Meter Reading Specialists for their services, electricity to run the system and repair work. In the past 25 months an unaudited report from Meter Reading Specialists shows the city has collected only about $100,000 in bill payments from the 274 sewer and water customers, Hinton said. The city is seeking reimbursement of the lost $74,000.

Additionally the Mississippi Department of Environmental Quality sent notice to the city that a penalty of $1,000 a day will be fined due to the current state of the system. Under the previously listed grounds the city asked to relinquish receivership of the system back to the commission.

To recoup their financial losses the city proposed a surcharge to Dixie Utility customers for a period of either three or five years. If approved, surcharges under the three year plan would be $7.47 per month. Payments under the five year plan would be $4.48 per month, Hinton said. The surcharges would be in addition to monthly bills.

Picayune is not the only entity attempting to recoup expenses for work on the failing system. Kati Kelly, Director of Operations for Complete Environmental, said the company is still seeking about $54,000 for work conducted on the system. Bell Utilities is also seeking reimbursement of $14,999.94 they lost during their receivership, their legal representation said during the hearing.

“It cost more to operate the system than the rate the customers were paying,” Carlisle said. “The system’s basically worth nothing.”

Pearl River County’s Utility Authority may be the last hope for the failing system. Utility Authority engineer Brooks Wallace said a quick fix on the system would cost about $2 million. To completely rebuild the system would cost about $13 million. Wallace said those estimates were from 2005 and a 10 to 15 percent increase is expected under today’s prices.

Before the storm the system was in a state of disrepair. Randy Sibley is a utility investigator for the commission and investigated the state of the system before and after the storm. During his investigation Sibley said owner Nick Smith was hard to find when problems arose before the storm. After the storm Smith was nowhere to be found and when Sibley did locate him Smith seemed unresponsive to the needs of the system, Sibley said.

“As everybody is aware it was basically chaos after the storm,” Sibley said.

The Utility Authority offered some solutions to problems plaguing the system. Wallace said immediate repairs include rerouting the failing sewer system in the Westchester subdivision to Picayune’s system. Even though MDEQ installed chlorine treatment to the waste water system treatment of the waste water is almost non-existent, Wallace said.

Wallace said construction of a new plant would involve a year of design and two more in construction.

The Utility Authority seemed interested in taking over the system but states they do not have the funds available to do so. In June the Utility Authority will assume ownership of Poplarville’s system and they are currently in discussions with Picayune to do the same, Wallace said. Long term plans for the system involve two new wells, an elevated water storage tank and larger water mains, Wallace said. Though water leaks are still expected even with the overhaul.

No decision was made during the hearing. Matters discussed that day will be taken under advisement as interested parties await an order by the court, City of Picayune attorney Nathan Farmer said.