HBPW will charge $4.36 for each 1,000 gallons sold to PWSD.

A disagreement between two area water providers has been settled out of court.

The settlement between the Ralls County Public Water District (PWSD) #1 and the Hannibal Board of Public Works (HBPW) resolved an outstanding dispute on the legality of a rate increase.

PWSD purchases all of its water needs from the HBPW wholesale. The district, which serves much of northern Ralls County, is the HBPW’s largest customer.

But when the HBPW board voted in August 2016 to raise the rate of water purchased by PWSD, officials in the Ralls County district disputed the legality of that rate hike. HBPW sought to increase the charge from $3.94 per 1,000 gallons to $4.75 per 1,000 gallons — the same as what Hannibal residential customers pay to use now. Mediators working with the two utilities have agreed upon a middle ground. HBPW will charge $4.36 for each 1,000 gallons sold to PWSD. With each side in agreement, 10th Circuit Presiding Judge Rachel Bringer Shepherd dismissed the lawsuit on Feb. 2.

The lawsuit stems from an August 2016 rate increase instituted by the HBPW on PWSD. HBPW officials finalized the rate increase following months of discussion between the two groups focused on extending the existing water purchase contract. PWSD board members voted unanimously to set out on their own with construction of a new drinking water plant during their September 2016 meeting. In November 2016, HBPW started charging PWSD the new rate.

According to a letter from PWSD attorney Mark Piontek dated Jan. 18, 2017, the PWSD had received a bill that included a rate increase that “does not comply with the HBPW’s contractual obligations.”

According to Piontek, the PWSD “recalculated the billing using the most recent lawful rate” and paid that amount. The difference between the HBPW’s bill and the PWSD’s payment was $6,170.53.

The lawsuit filed by PWSD alleged breach of contract in relation to that rate increase and requested the court to interpret the contract’s details. District officials set up an escrow account and continued to pay the previous wholesale water purchase rate during the litigation process while depositing the remainder in the escrow account. In addition to deciding a new rate, mediators recommended that PWSD pay a settlement amount of $64,399.97 to HBPW from that escrow account. About half of the escrow funds remains, and will be transferred to the district’s general fund account.

PWSD Alliance local manager Lucas Drullinger said the mediated rate of $4.36 per 1,000 gallons will serve as the new wholesale water purchase price for the district, but the increase in purchase price will not result in an increase in water and sewer rates for customers. A 10-percent rate increase for water and sewer service effective Jan. 1 was established to assist with debt coverage ability and capital costs associated with the district’s forthcoming new drinking water plant.

Customers are likely to see another rate increase in Fiscal Year 2019 — again related to capital costs for the water plant, not the increase in purchase price from BPW. Drullinger said he anticipates future rate hikes would cease with the drinking water treatment plant set to be constructed and fully operational by summer 2019.

District Clerk Ronda Barton said PWSD customers’ bills are set up based on usage levels — effective Jan. 1, customers pay a minimum of $27.65 for up to 1,000 gallons. From that tier onward, the cost is $15 for every 1,000 gallons; there’s also a bulk rate of $11.74 per 1,000 gallons for customers using more than 20,000 gallons.

Drullinger said officials in the Tenth Circuit Court, attorneys and other staff members helped Ralls County PWSD #1 put the litigation process behind them so everyone could move forward.

“In a sense, we came to a fair compromise, and that’s what it’s about,” he said.

Reach reporter Trevor McDonald at trevor.mcdonald@courierpost.com