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Wanship Cottages Water Company raises rates 700%, prompting formal complaint

Wanship Cottages Water Company's pump house sends water from the neighborhood well up the hill to the tank, where there's another unused well site.
Josh Craigle
Wanship Cottages Water Company's pump house sends water from the neighborhood well up the hill to the tank, where there's another unused well site.

Eleven neighbors are calling on state regulators to step in.

Wanship Cottages Water Company, not to be confused with the larger Wanship Mutual Water Company serving the town north of Interstate 80, serves the Wanship Cottages neighborhood.

It’s a community with no more than 40 water hookups on the east side of state Route 32, below the Wanship Dam that created Rockport Reservoir.

Since 1988, most residents have paid about $19 per month for water. This year, they’re paying $153.50, an over 700% increase.

It was a shock to residents like Josh Craigle and Paige Guion.

“She opened up our bill, knowing there was going to be an increase, but she opened up a quarterly bill of almost $500,” Craigle said. “And she was, kind of, mystified.”

A water system in disrepair

Despite the large increase, water company owner Grady Kohler says it's necessary.

Kohler, the principal broker, partner and general manager at Windermere Real Estate-Utah, owns a house in Wanship Cottages and took over the water company in the fall of 2022.

“I did not think that there was going to be this much work, and I did not think that the water company was in such bad disrepair until I looked under the hood,” he told KPCW.

Repairs have brought Wanship Cottage Water Company into drinking water compliance, but the owner says the current well is nearing the end of its useful life.
Josh Craigle
Repairs have brought Wanship Cottage Water Company into drinking water compliance, but the owner says the current well is nearing the end of its useful life.

Kohler said the neighborhood’s well, drilled over half a century ago, wasn’t meeting state drinking water standards before he got there. Repairs have since improved water safety.

But the lining on the well is wearing out too, he said.

Kohler wants to eventually cap that well next to the neighborhood’s pump house and switch to the water company’s unused well up the hill across state Route 32, which is where the water tank is.

After capping the lower well, he said he’d like to build a barn on that property for his personal use.

Most neighbors agree the water system needs to be fixed, so rates should go up. The disagreement is over how much they should increase.

That disagreement led to a formal complaint April 15 to Utah’s Public Service Commission, which regulates utilities companies.

A formal complaint

In the complaint, 11 Wanship Cottages homeowners allege the increase is unreasonable and said Kohler did not tell residents they could protest at a Nov. 1, 2023, public hearing.

“After no one showed up at the public hearing, it was done; it was over,” Craigle said.

The month before the public hearing, Kohler convened a community meeting at the neighborhood pump house. After that, he sent an email reminding residents about the hearing.

Residents have also complained Kohler “implied the state sets the rates.”

Documents show Kohler initially wanted a base rate of $91, and after consulting with Utah’s Division of Public Utilities, he proposed $121.

Then after taking a closer look, an analyst with the division recommended $153.50. Kohler agreed to the rate.

The analyst who worked with Kohler to set the rates has not responded to KPCW’s multiple calls for comment.

For his part, Kohler said the steep increase wouldn’t be necessary if the company had raised rates since the ‘80s and it hadn’t been running a deficit, and he's open to ideas on how to save money.

A look at the books

That was how Kohler came to run Wanship Cottages Water: he gave it a loan in Feb. 2021.

He didn’t foreclose on the loan, but he took over the company when the previous owner couldn’t pay him.

Prior to that, he also bought the two lots where the water tank and pump house sit. He now has the water rights associated with both.

“My attorney told me not to buy it. My wife told me not to do it,” Kohler said. “I have just kind of an affinity for water rights, and I thought it was not going to be this big of a pain in the butt.”

He earns $200 per month in rent from owning the two wells’ lots, which would be reduced if one were capped as he has proposed. Beginning this year, Kohler is also paying himself $500 a month to run Wanship Cottages Water.

Kohler said he’s not aiming to profit by owning the company and that private water companies can only return up to 10% profit margins annually under Utah law. Right now, that would be about $753.

According to accounting documents he provided, Wanship Cottages Water Company lost close to $25,000 last year. Kohler said he covered that out-of-pocket and didn’t pay himself a salary that year.

He admits he’d like to be paid back for those losses and for the loan he gave the company in 2021, which he said has an outstanding balance of around $49,000.

The company, solely owned by Kohler, is paying Kohler about $1,000 per month to settle the loan debt. The Division of Public Utilities expects the debt will be settled in 5 years.

2024 is the first full year the new water rates will be in effect, and with about $65,000 in revenue, Wanship Cottages Water Company may break even for the first time in years.

Waiting for regulators to weigh in

Some have thanked Kohler for working to put the water system back on track. Others say the severe rate increase is unethical.

Guion said some of her and Craigle’s neighbors are on fixed incomes and can’t pay close to $2,000 for water each year.

“It's always been about the morals,” she said. “You can't do this to elderly people. We have people who live here who get food from Meals on Wheels.”

The complaint she, her husband and 10 other neighbors have brought advocates for more gradual increases, like Oakley upping rates from $25 a month to $40 by 2028. They cite comps such as Wanship Mutual’s $62 and Tollgate Water Company’s $74 rate.

But Kohler has said, because Wanship Cottages Water is small, it doesn't benefit from the economies of scale that larger water providers do.

He claims he’d like to make the company a “community water company” in the future, whether that’s a nonprofit or a consumer co-op. Others have suggested annexing into Wanship Mutual.

The water rate could come down after the company settles outstanding debt and repairs. In the meantime, the $153.50 rate stands.

He has until May 20 to file a response to the neighbors’ formal complaint.