Chesapeake paying Portsmouth millions for unused water

CHESAPEAKE

The city recently paid $1.7 million to Portsmouth for water it never used and never received.

Chesapeake officials sent the check even though Portsmouth leaders had offered to let the city off the hook. But Chesapeake administrators never followed up with Portsmouth to avoid the expense.

"If it is true, then this story is disturbing," Chesapeake Mayor Alan Krasnoff said Friday. Krasnoff declined to comment further, saying he needed to meet with City Manager William Harrell.

On Friday afternoon, Harrell's office released a statement suggesting that perhaps Portsmouth could offer Chesapeake a credit toward future water purchases.

Chesapeake officials did not respond to a Feb. 16 Freedom of Information request from The Virginian-Pilot asking for the city's water records until Friday. However, Deputy City Manager Amar Dwarkanath and other officials confirmed earlier in the week the city's water usage and contract obligations provided by Portsmouth.

Since early 2009, Chesapeake has paid more than $2.8 million to Portsmouth for water it did not need or use.

The payments underscore the complexity of Chesapeake's water policy, which causes city residents to pay significantly more for water than their neighbors in other South Hampton Roads cities.

The policy was created in 1990, when the city was experiencing unprecedented growth and leaders worried whether the city could keep up in supplying even basic services.

Today, Chesapeake pays millions a year for water from other South Hampton Roads cities while also paying for the upkeep of its own water system, which it is relying on less.

Dwarkanath helped the city draw up its water policy.

"Water was very important for us to secure our future," said Dwarkanath, who in the 1990s oversaw the city's public utilities.

"If you're planning for the future, and you depend on a resource that is valuable and not available, you try to secure it, and make sure it'll be available when you need it," he said.

So in 1990, Chesapeake signed a 31-year water contract with Portsmouth and long-term contracts with Norfolk that required it to buy increasing amounts of water in later years.

The Portsmouth contract required Chesapeake, starting in 2000, to buy 3 million gallons of water a day. On Jan. 1, 2010, the minimum amount rose to 4 million gallons a day - whether Chesapeake used the additional water or not.

Two separate contracts with Norfolk also have escalation clauses, which now require Chesapeake to buy a total of 9 million gallons a day of water from that city.

While the purchase amounts have increased, Chesapeake's growth rate has slowed significantly. In addition, conservation efforts such as low-flow toilets have cut Chesapeake's water usage.

A letter from Harrell, the city manager, states that in 1999, the areas of Western Branch and Camelot, which receive Portsmouth's water, used 3 million gallons a day. Despite growth and new development, the same part of the city used 2.8 million gallons a day in 2009.

According to documents obtained from Portsmouth under the Freedom of Information Act, Harrell suggested in 2009 that the two cities review and amend the contract. He cited "temporary slowing of growth" and the "current economic situation in Hampton Roads."

Officials from the cities met, and in January 2010, Harrell wrote again, asking that Portsmouth hold off until January 2011 increasing the minimum purchase requirement to 4 million gallons. That time would allow his city to build a new storage tank and pumping station to handle the increase, he wrote.

Portsmouth City Manager Kenneth Chandler responded in October, saying the "minimum purchase requirement could be delayed" until 2011, and that "We will certainly make ourselves available to work through this issue with the Chesapeake team."

Chandler never got a response from Chesapeake. So in January, his city sent Chesapeake a bill for the entire 4?million gallons a day.

Chesapeake has spent $4.5 million in the past year to build a storage tank and pumping station in the Bowers Hill area to make sure it can draw down all 4 million gallons of Portsmouth water. That work is almost done, Dwarkanath said.

Chesapeake's water use has picked up in recent years, and even though growth has slowed, its water system continues to expand as established neighborhoods are hooked up to city lines.

About 120 properties in a neighborhood near Battlefield Golf Club recently were taken off wells and connected to city service, and two years ago, the large neighborhood of Albemarle Acres was added to the city's water system.

Documents and interviews with leaders in both cities indicate they have discussed long-term changes to their water contract that would allow Chesapeake to ease its purchase requirements in exchange for extending the agreement for another decade or longer.

"We'd be willing to have a conversation with them in terms of how we provide future services," Chandler said. "My focus is on what's the long-term relationship between our cities."

The money Portsmouth makes through bulk water sales provides a guaranteed income and allows the city to keep rates low for its residential customers.

Chesapeake, meanwhile, pays Portsmouth 1.5 times that city's going residential rate for the first 3 million gallons of water, and 1.2 times the rate for additional gallons.

Those higher costs are passed on to Chesapeake residents.

On average, Chesapeake's water customers pay at least a dollar more per CCF of water than customers in other South Hampton Roads cities. A CCF, or one hundred cubic feet, the most common measurement of water usage, equals 748 gallons, and typical residential customers use roughly 6 or 7 CCF a month.

Chesapeake requires residents to buy 6 CCF every two months at a flat rate of $37, which equates to $6.17 per CCF. Additional CCFs are almost $4.18 each.

In comparison, Portsmouth, Norfolk and Virginia Beach each charge residential customers far less than $4 per CCF, and require no minimum purchase.

Dwarkanth said Chesapeake's costs are the price of security. Because the city has multiple water sources, it is better insulated from contamination problems or drought, he said.

"We're diversified, which is good," Dwarkanath said. "What kind of price are you going to put on that?"

Meghan Hoyer, (757) 446-2293, meghan.hoyer@pilotonline.com

Letter to Chesapeake City Manager William E. Harrell regarding water sales contract with Portsmouth