Mill’s year-by-year water usage charges, 1928-2020
This chart shows year-by-year from 1928-2020, how much the City charged Port Townsend Paper for full use of the Olympic Gravity Water System and unlimited, unmetered water. It is based on the four leases, 1928, 1944, 1956 and 1983, between the City of Port Townsend and the mill. Technically, the mill has never been charged specifically for water: the agreement is structured so that the mill pays an annual fee to rent all infrastructure and unlimited water except for an amount reserved for use by the City for its customers.
Many years have zeros — no charges to the mill at all. Figures shown do not account for reductions granted to mill for mill’s share of maintenance, for interest the City may have accrued on bonds, etc. It also appears that until the new water treatment system came online, City taxpayers were covering the cost to filter & chlorinate water going to the mill.
Pipe Size gives perspective
After you’ve seen how much the City charged the mill for unlimited water use, this 1904-1928 water pipe comparison (shown in this post’s featured image) gives insight as to relative loads on the system.
6″ pipe (dark blue circle) = original OGWS pipe diameter as built by City in 1904
30″ pipe (brown circle) = diameter of pipe as expanded by City in 1928 (along with added sources and reservoirs) to accommodate mill.
The pipe is sized to provide approximately 20 million gallons per day*: a minimum of 14 mgd to the mill plus a maximum of 4 mgd to City customers, later increased to 5 million.** (sources: *2019 Port Townsend Water System Plan Update, p. 3-18, and **Lease Agreements.)
The mill has been averaging 14 million gallons per day for several decades (source 2014 City Water Conservation Plan), while all other customers have used about 1 million gallons per day.
So non-mill users account for 1/20th of the current system’s design flow.
The mill’s water usage has never been metered, even though it was promised when the new water treatment facility and related re-piping was coming on board in 2017.
The mill’s usage is estimated as shown in the 2014 Port Townsend Water System Plan Update, Appendix B: “Mill use calculated by subtracting City master meter and LUD use from City Lake meter average”, although the document notes that the City Lake meter regularly fails to record data. The 2019 Water Plan Update says that new meters were installed in 2017 (p. 2-5), which allows the indirect metering to continue more consistently.
Maintenance is often cited as a reason for the mill to be exempted from paying comparable or proportional water rates. Around 2012, City officials roughly estimated the value of maintenance done by the mill at about $186,000 per year.
For argument’s sake, if the City has 5,000 other customers averaging $200/month (wild guesstimate) that would be $12 million/year for use of 1/10 as much water as the mill uses.
The leases seem to say:
Aside from any parts of the system not used by the mill, City covers “normal wear-and-tear” and “major repairs” on the entire system.
On only whatever remains after that, a 40%/60% split between City and the mill is applied.
From the 1928-1944-1956-1983 City-mill water usage leases
Ratepayers use 6% of what the water system was designed to deliver, while the mill uses about 93%. City (taxpayers) cover 100% of most of the water system maintenance; the mill is responsible for about 60% of whatever is left on the portion that they use after “normal wear-and-tear” and “major repairs”.
The mill has not had to make payments for water or system usage since at least 1987.
Through the leases, the City has made a pattern of forgiving even scheduled payments for water usage from the mill. It may have had justification, for instance, when the town had a population of 4,000-6,000 with perhaps 50% of the population working at the mill. However, now, in the last several decades, the ratio has become closer to 10,000 population with 280 workers at the mill, so the mill’s economic weight has changed significantly.
The mill uses at least 10x as much water as the rest of the town together, while paying nothing for the privilege. The burden falls on other businesses that do pay their share, regular ratepayers who pay a higher rate to accommodate, and taxpayers. The City continues to charge the dozen or so low income people every month whose water has been shut off, while the mill pays nothing. What would the rate structure look like if the mill were billed consonant with everybody else in town?
The past contracts frame the mill’s payments in terms of an annual rental and what looks to be nominal maintenance responsibilities, for full use of the system and unlimited water, whereas the rest of us are on various schedules with base rates plus monthly usage charges.
Questions of what kinds of diversity, what kinds of jobs we want to culture in our town need to be discussed and fully supported. But it is clear that, strictly in terms of the water contract, where much of the financial considerations took place for the mill’s role in the community, the balance has changed, become unbalanced, and needs to be revisited.
The terms of any new water contract with the mill should be structured so that rather than leaning on other area businesses, ratepayers and taxpayers, which for better or worse has been the case for at least the past several decades, the mill now should carry its own weight, as is expected of all other businesses in town.
As of March 2020, the mill’s lease with the City for water & water system usage, which was due to expire on March 15, 2020, has been extended for 6 months. The mill has had a significant place in the history & economy of the City. Yet, over the life of the mill, the economy has changed, and roles have shifted such that financial relationships & relative burdens imposed between the City and the mill have become lopsided.
The information presented here should assist in a clearer-eyed understanding of the existing water contract between the City and the mill, if not so that a contract may be written that is more fair and equitable to the City as well as all other ratepayers, then so that all of us can better understand the historic and changing relationship.
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