Florida Governmental Ut¡lity Authority - FGUA

The FGUA recently received a letter, dated October 26, 2011,, from the City of Cape Coral (see
Attachment B) which provides notification to the FGUA that it is not meeting its obligations under the
reclaimed water supply agreement. FGUA staff has met with the City of Cape Coral staff, as well as
Lee County representatives to discuss the issues and the potential solutions outlined in the next
section. A copy of the FGUA response to the letter from Cape Coral is included as Attachment C.
S)¡stem financial issues/Lack of lncentive for customers to use resources iudiciouslv
The NFM system has struggled financially since acquisition by the FGUA. The cash flow situation has
improved somewhat, in part due to the short term loan completed in 2OLl. A contributing factor to
the system's financial difficulties is that the Financial Feasibility Study, upon which the acquisition
financing was based, assumed that all customers would be charged for reclaimed water
immediately. Due to permitting of the Del Prado plant expansion and the process of meeting with the
various customers, the implementation of charges to all reclaimed water customers has not been
completed.
As mentioned earlier, the provision of free reclaimed water to some customers has contributed to
the supply issues outlined. lt is believed that the implementation of the Board approved reclaimed
water charge will provide a necessary incentive for users to be more efficient in their use of the
resource. For example, it will be less likely that a customer would utilize reclaimed water to fill golf
course ponds for aesthetic reasons if this activity was incurring an expense.
It is important to note that in the meetings that have been conducted with reclaimed water
customers, it has been communicated to FGUA staff that a charge for the reclaimed water by the
FGUA would place a large financial burden on the users and could cause some of the golf courses to
cease operations.
Recommended FGUA Action Plan
1-. Authorize implementation of approved reclaimed water rate/charge for all reclaimed water
customers in NFM System. lmplementation of this action would include:
. Approval of Resolution 2OL2-IO, scheduled for January L9. 2OLL, amending the North
Fort Myers rate schedule regarding reclaimed water.
. Send a notice letter in Januarv 2012 to all reclaimed water customers, not currently
being billed, of the plan to implement a charge for reclaimed water;
. The charge for all reclaimed water customers would be effective March L.2012;
. The newly charged customers will initlally be charged a phase-in rate of $.14lkgal, which
is L/2 of the current Board approved rate of $.28/kgal;
. Effective Oclober L.2OI2, the reclaimed water customers will be charged the full FGUA
reclaimed water rate for the NFM system.
2. Authorize necessary capital projects to test, repair or replace all reclaimed water meters, and to
install appropriate automated control mechanisms.
¡ TestinÉ of existing meters is already under way.
. Staff is working to finalize the project scope, obtain cost estimates, prepare necessary
work authorizations and budget/ClP modifications to expeditiously move forward with
these improvements.