Water prices staying put

The Water Authority will not be reducing the price it charges for water, despite recently inking a deal that will secure it a 20 per cent reduction in the cost of water produced at its Red Gate desalination plant.

Under a deal with Consolidated Water Co, which operates the plant, the authority will get water from the Red Gate plant 20 per cent cheaper, while CWC will foot the bill for upgrades to the plant, which was originally built in 1989.

The 20 per cent price decrease only applies to the Red Gate Plant, one of three plants CWC operates for the Water Authority. CWC is building a fourth plant for the authority in North Side, which is scheduled to come online in early 2009.

In a statement, the Water Authority said a 20 per cent saving in the purchase cost of water alone from one plant does not necessarily have a significant effect on the overall expenditure needed to operate its island-wide network.

‘The Red Gate plant’s water production capacity will in fact represent only one-fifth of the total installed water production capacity for the Water Authority on Grand Cayman once the Water Authority’s newest 2.4 million US gallon per day water production plant in North Side is commissioned in early 2009,’ the statement said.

‘Additionally, over the next 10 years the Water Authority will be investing in excess of CI$100 million for a myriad of capital projects, which are necessary either to keep up with the growth of the Cayman Islands, or to provide piped water to presently non-covered areas,’ the statement continued. ‘These projects include, but are by no means limited to, the expansion and upgrade of the water distribution systems (on Grand Cayman but also on Cayman Brac and Little Cayman) and the extension of the wastewater collection system on Grand Cayman.

‘These capital projects will have to be financed, monies which must be repaid thus increasing expenditure. Therefore we continue to seek cost savings where we can as this is beneficial to off-set increasing costs as we continue to invest in our infrastructure to meet growing demand.’

Consolidated Water Co. CEO Rick McTaggart said one of the reasons his company will be able to offer the reduced water rate is because of new and more efficient equipment to be installed at the Red Gate plant.

‘The Red Gate Plant is almost 20 years old and the capital cost of the plant will be fully paid for under the existing contract at the end of this year,’ he said.

‘The capital cost of constructing the plant, which was built in 1989, represents a significant part of the total cost of producing desalinated water.

‘Because of the age of the plant, [because] WAC has paid for the original construction cost of the plant and [because] we will be upgrading the plant with newer and more cost-efficient equipment, we are able to offer a reduced rate.’

Under the deal, announced on 2 September, CWC’s contract to operate the plant will be extended for another seven years.

It is the third such contract extension the company has received from the Water Authority for operating desalination plants on Grand Cayman.

‘We believe it demonstrates the Cayman Island Government’s continued satisfaction with our service and pricing,’ Mr. McTaggart commented.

‘The Red Gate contract was set to expire in November of this year, and we expect the new contract to take effect prior to such expiration date, in order to ensure no disruptions in water production at the plant.’

Capital improvements to be carried out by CWC will extend the useful life of the Red Gate plant for at least another seven years, Mr. McTaggart noted.

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