Ocoee Utility District Faces Financial Scrutiny Over Rate Increases and Fee Structures

The Tennessee Board of Utility Regulation convened on July 17, 2025, to discuss significant concerns regarding the financial health and rate structure of the Ocoee Utility District. The meeting highlighted the need for a comprehensive rate study and raised alarms about the affordability of proposed rate increases for local customers.

During the meeting, board staff expressed serious concerns about the utility's trajectory, particularly in light of a recent cost of service study conducted by Jackson Thornton. This study indicated that the utility would require a substantial rate increase to support its capital plans, which include approximately $51 million in projects. However, the utility is seeking $62.5 million in funding, raising questions about the adequacy of the study's recommendations.

The board staff noted that the utility's financial advisor, Kidwell and Company, suggested a staggering 25% rate increase for three consecutive years. This would potentially double the cost of water for customers, with a bill for 10,000 gallons rising from about $60 to $120, excluding sewer charges. Board staff emphasized that such increases could place an undue burden on customers and urged the utility to consider the affordability of these rates.

Concerns were also raised about the high fees associated with the bond issuance for the utility's projects. The proposed fees for financial advisory services were significantly higher than industry averages, prompting questions about the justification for these costs. Board members expressed confusion over the utility's decision to proceed with these fees without exploring other options or comparing them to similar projects.

The meeting concluded with a call for further clarification from the utility's management regarding their financial strategies and the rationale behind the proposed rate increases. Board staff recommended that the utility engage with Jackson Thornton to reassess the rates and ensure that they align with the actual financial needs of the district and its customers.

As the board continues to review the situation, the implications of these discussions could have lasting effects on the utility's operations and the financial burden placed on its customers. The board is expected to follow up with the utility to ensure that all financial decisions prioritize the affordability and sustainability of services for the community.