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Virginia Politics
Posted at 06:17 PM ET, 12/02/2011

Petersen could derail Fairfax move toward greater control over water service

Northern Virginia’s water war could soon have a new front in Richmond: A state senator says he intends to derail Fairfax County’s plans to become the sole provider of water service in some areas and set universal rates for county residents, including those who receive water from Falls Church or other municipalities.

Sen. J. Chapman “Chap” Petersen (D-Fairfax), whose district includes Vienna and the City of Fairfax, said Friday that he is drafting a bill for the upcoming state legislative session that would prohibit the Board of Supervisors from interfering with existing service between municipal water utilities and their customers.

Petersen’s threat comes as the Board of Supervisors prepares to hold a public hearing Tuesday on whether to amend its code to allow the board to establish exclusive service areas for Fairfax Water, the county-controlled authority that supplies most water in the county.

The proposed ordinance would also allow the county to set maximum water rates and fees for residents, even if their water comes from a municipal utility, unless those municipal utilities justify their higher rates.

Falls Church, in a letter dated Thursday to Fairfax County’s executive, argued that the proposed ordinance amendment could actually drive rates higher and trigger several other negative consequences.

Board Chairman Sharon Bulova (D) and other members of the Democrat-led Board have argued that the county must act to prevent municipal water utilities from imposing higher rates on county residents who have little power to fight back. The county’s Consumer Protection Commission this year said that under Falls Church’s new water rates, county residents who receive city water pay about 60 percent more than their neighbors on Fairfax Water.

But the move has troubled officials in neighboring jurisdictions who accuse the county of throwing its weight around to create a monopoly that would reap huge revenues from new development in Tysons Corner and Merrifield.

In a Dec. 1 letter to Fairfax County Executive Anthony H. Griffin, Falls Church City Manager Wyatt Shields reiterated the city’s concerns, including a warning that the county’s proposed ordinance could actually drive county residents’ water service rates higher.

Shields argued that the new ordinance would increase costs by forcing the city’s water utility to perform several costly rate studies prior to making any adjustment of its rates — once to set the rates justified by law, again to satisfy the county, and perhaps a third time if county residents challenged those new rates. Shields said mandated hookups to Fairfax Water could also mean building duplicative water systems.

Noting that Falls Church residents assumed the financial burden to build and operate a utility that has allowed Seven Corners, McLean, Merrifield and Tysons Corner to grow, Shields said that forcing residents to hook up to Fairfax Water now could leave existing customers alone to pay for previous capital investments that had been undertaken to handle new growth.

Shields also warned that by injecting new uncertainty into the process of setting water rates, the county’s move might trigger a credit downgrade for Falls Church’s water utility that would drive its borrowing costs higher. He said the ordinance could even force the city to sell its public water system to an investor-owned utility or to a newly created Falls Church Water Authority because both would be exempt from county control.

As before, the city manager also raised the possibility that the city will go to court to challenge the county’s assertion of authority over the city.

“The City may also challenge the mandatory hook up to Fairfax Water, which would impose a extraordinary financial burden on the business community, and leave our existing customers with the stranded costs of prior capital investments in pumping capacity and storage to serve growth,” Shields said.

Until this year, the dispute focused mostly on Falls Church’s treatment of about 100,000 customers who live in Fairfax County but receive city water. In years past, the city billed those customers above cost and transferred the surplus to its general fund. From 1981 to 2008, Falls Church directed more than $58 million in surplus revenue to the city treasury — a practice city officials say is common among municipal utilities to cover the costs of building and operating their systems.

But the course set by Fairfax County in recent weeks to amend the ordinance and grant itself more sweeping authority appears likely to affect all the municipalities that provide water to county residents.

By  |  06:17 PM ET, 12/02/2011

 
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