Officials at Central Arkansas Water and Jacksonville Water Works are still negotiating the amount of water that Jacksonville will be required to purchase under its contract.
An agreement could be reached as early as next month, Central Arkansas Water Chief Executive Officer Graham Rich told the agency's Board of Commissioners on Thursday.
The Jacksonville utility shorted Central Arkansas Water in its September and October payments for August and September water usage due to not using or paying for the minimum purchase amount required under a 2004 contract. Central Arkansas Water says Jacksonville owes its agency $109,410.23 after a late penalty is assessed on the overdue amount.
A 2004 contract between the two utilities states that Jacksonville is obligated to purchase a minimum of 3 million gallons of water per day from April to September and 2 million gallons per day from October to March.
Jacksonville wrote Central Arkansas Water in 2010 to say it could no longer afford to purchase that much and requested a reduction. Central Arkansas Water said it couldn't make any promises but agreed to work with the smaller utility.
Nothing changed over the next four years. Jacksonville wrote the agency again in January and said it objected to the terms of the contract and the 10-year automatic renewal clause would not take effect the next month as planned. The Jacksonville utility again requested a reduction in the minimum daily purchase amount.
Central Arkansas Water never replied with a written response to that letter, and Jacksonville Water Works continued to pay the full amount until September, when Jacksonville paid only for the water it used, Jim Peacock, chairman of the Jacksonville Water Works Commission, told the Arkansas Democrat-Gazette last month. The utility paid $101,979.58 of its $152,068.47 bill.
That caught Central Arkansas Water's attention, and officials informed their board of commissioners of the situation last month. Rich gave an update to the board Thursday about the progress of negotiations.
Jacksonville has been paying for the obligated amount of water under the contract since the November bill for October's water, Rich said.
"I'm hoping by next month we will have something in place to move forward," he said. "We have had movement on this. I believe we will get an agreement reached."
While talks are still ongoing, there is a possibility for renegotiation of the minimum purchase amount, said John Tynan, Central Arkansas Water's director of community relations and public affairs.
The agency has given Jacksonville a few options to consider. One would incrementally reduce Jacksonville's required daily minimum to the amount it requested by reducing the daily amount by 200,000 gallons each year. A second option would allow Jacksonville to determine its usage schedule, as long as the water usage averages out to 2 million gallons daily over a year's time.
Jake Short, general manager of Jacksonville Water Works, said by phone that the meetings between his utility and Central Arkansas Water over the past month have been productive.
"I think we are still kind of working out our issues as far as getting the minimum reduced to a level both utilities can live with. We know where each other stands. I think it's going to take some time to see if the minimum they are willing to go down will work for us," Short said.
Asked if the utility would pay the balance from August and September that Central Arkansas Water says is overdue, Short said his utility "is close" to making a decision on that.
The Jacksonville commissioners "don't formally meet until Wednesday and no formal decision will be made until then," he said.
Rich told the Central Arkansas Water board Thursday that the Jacksonville officials seemed amenable to paying the overdue amount.
Peacock, of the Jacksonville Water Works Commission, said Thursday that the two utilities have "made real strides in coming to an agreement where we can live with it and they can, too."
"We are not to the exact point," Peacock said. "I think we are close enough where we want to try it for about six months to see if what they propose will work and if it will, then we are ready to go. If it won't, then we will go back to their board and ask for a reduction in the amount of water we have to take," Peacock said.
He added that Jacksonville's biggest problem is that it agreed to a minimum purchase amount based on the fact that it sold water to other utilities. Since then, its two largest customers -- Cabot and North Pulaski -- have switched to purchasing water directly from Central Arkansas Water.
Short said Jacksonville Water Works has some "projects" that could play into what its demand for water will be and that the utility will be watching that for the next few months. He didn't elaborate on what the projects were.
"The past month has been productive, and it's been good to be able to sit down with those folks [at Central Arkansas Water] and have a dialogue and try to work these differences out," Short said. "We all serve Central Arkansas ratepayers, and I think we all have them in mind in trying to get this worked out."
Metro on 12/12/2014