Service costs at Settlement Canyon Irrigation Company have gone up and some shareholders claim the bill is unfairly distributed.
Last year, SCIC charged its customers $110 per connection and $10 per share. For 2015, customers will pay $200 per connection and $10 per share, according to company president Gary Bevan.
The increase was necessary to help the irrigation company pay $60,000 on its $1.06 million loan, which was used to reinstall a pipeline from Sawmill Flat to Settlement Canyon Reservoir a year ago. Flooding destroyed the previous pipeline in 1983.
The extra revenue will also help pay for repairs made to the system throughout the year, pay employee salaries and start to rebuild the company’s reserve fund, Bevan said.
With the valley experiencing drought conditions for the past three or four years, SCIC hasn’t had enough water to sell to Tooele City, leaving it without that source of income, he added.
“We’ve been operating out of our reserve fund for the past several years,” Bevan said. “We have to start building up the reserves that we’ve been dipping into. You know, you can’t keep rolling in the red; it’s just not good business.”
The company has received some blowback after the cost increase, Bevan added. One Tooele City resident, Larry Seals, sent a letter to SCIC and the Transcript Bulletin protesting the company’s method for raising revenue.
In the letter, Seals said he understood why the company needed to increase its service fees, but questioned why SCIC would increase the connection fee instead of the share fee. He said he believes residents with one or two shares should pay much less than farmers and others who own 50, 100 or more shares.
“The person with 50 shares, after all, is entitled to 50 times as much water,” he said.
Seals also said he didn’t understand why the company had a connection fee, unless it was to replace a valve every 10 years. He has two connections and seven shares for the two homes he owns in Tooele.
Kyle Depew, also a city resident who has one connection and one share, agreed with Seals and added it wasn’t fair that the number of votes each person has on the company’s board is calculated per share.
“The farmers that have all the shares have all the voting rights; that’s what’s not equitable,” he said. “[And] farmers are the ones using all the water.”
But Bevan said the protesters don’t understand the big picture. He said the company board discussed whether to raise the connection fee or the share fee. Ultimately, the board members decided it would be fairer to raise the connection fee because residents receive all the water they need with just one share, while farmers are harder hit by water restrictions.
“There’s no guaranteed amount [of water] per share; all it does is give you the opportunity to use the water,” Bevan said. “We have a lot of people who have one share of water, and they can water continually on one share. Where you have people with more shares than that and are under more restrictions, they can’t do that. … Eventually, we’ll have meters and that will solve a lot of these problems.”
According to the company’s bylaws, customers must have four shares of water per acre owned. That’s two required shares for a half-acre lot, or one share for a quarter acre of land or less.
In addition, Bevan pointed out the SCIC’s biggest shareholder is Tooele City.
“Let’s face it, if we raise the price on shares to cover this, we would probably raise each share by 20 to 30 dollars,” he said. “You charge Tooele City, the only way they get their money is to tax us. People are going to pay it one way or the other. It’s the same way with the schools.”
Bevan also said Seals’ claim that the only repairs the company needs to make is replacing valves every 10 years wasn’t true.
“We do repairs every year,” he said. “Last year, we spent $36,885.92 on repairs and $22,110.83 in power bills to pump our wells. … We have a lot of expenses we need to run. That’s not including the everyday expenses, like payroll.”
In response to Depew’s complaint that voting on the board was slanted in favor of farmers, Bevan said, “That’s the way the company was set up. I guess it could change; you’d have to change the whole bylaws of the company to do it. But to be quite honest with you, I don’t think you could get the votes to do it.”