CPWS manages without GM plant
CPWS manages without GM plant
The loss of GM’s Spring Hill Manufacturing facility is just one more in a decade-long decline of industrial customers that have cut the amount of water Columbia Power and Water Systems sells in half.
CPWS General Manager Jim Clark said losing the former Saturn plant’s business would not have an immediate impact on water rates, but any time the system loses a big customer, fewer customers must make up the cost.
“It will have minimum impact on us short-term,” Clark said.
Clark said because much of the operating budget for the water system is fixed, there is very little change in how much it costs to deliver water to the customers. With more customers the costs are spread across a greater base. This means each customer will pay less for the same service, but with fewer customers, the price of the service increases.
“Let’s say (GM) used to be 10 percent of our total production. When you reduce that, your fixed costs — bonds and debts and such — remain the same,” Clark said. “Those costs essentially get passed to other customers.”
At its height, the GM plant used about 1.2 million gallons of water per day, or about 10-15 percent of CPWS’s capacity.
“They used to be our second largest customer. It bounced around between Maury County and Saturn,” Clark said. “They are now considerably less.”
In the past 12 months, Clark said that number has dropped to 400,000 gallons per day. With much of the facility indefinitely shuttered, that amount is expected to drop even farther.
“They have had a steady decrease over the last four months,” Clark said. “They are using only one-third of what they used to use.”
In the early part of the decade, CPWS borrowed millions to upgrade its facility to treat more water. At the time the system was pulling about 14 million gallons per day from the Duck River and was about to exceed the amount permitted by the state.
To get a permit allowing more water to be used, the system had to be upgraded. However, as large industrial customers began to close down, the amount of water the system needed dipped.
“We’ve lost several large customers in the past few years,” Clark said. “In 2000, I was selling between 12-14 million gallons a day. I’m down between 7-8 million gallons today.”
But the amount of water pulled has little effect on the system, Clark said. While the amount of chemicals and electricity may be reduced, much of the budget goes toward fixed cost items such as bond payments, salaries and benefits for employees.
In 2008, the city council approved a two-part water rate increase to help offset some of these costs.
But attempts to find new customers have met resistance from City Council members who fear such sales would leave Columbia without adequate water supplies in drought conditions.
Last summer, several council members were highly critical of a proposal to sell up to 1 million gallons a day to Spring Hill. The council demanded changes which cut the length of the proposed contract, let the city end the agreement and prevented Spring Hill from reselling the water.
Spring Hill used to buy most of its water from CPWS.
The more customers the less each pays, Clark said. But the closure of the majority of GM’s plant means CPWS must operate on a tighter budget for the foreseeable future.
“We are used to tightening up,” Clark said.
Story created Jan 29, 2010 – 11:27:11 EST.