Othello starts new water contract with J.R. Simplot

Rates to increase 32 percent for using city water

OTHELLO - Othello and food processor J.R. Simplot agreed upon a new water contract to gradually increase Simplot's rates by 32 percent over the next five years.

At the end of five years, a city ordinance will determine Simplot's water rates instead of a contract.

Simplot is the town's largest water user.

The Othello City Council approved the new five-year contract Wednesday along with an addition to an existing city ordinance defining an industrial bulk water user.

An industrial bulk water user consumes more than 30,000 units, or 22.44 million gallons of water per month, according to the city's ordinance.

Simplot's former contract began in 1982 and its water meter rates remained the same for years, said Othello's finance officer Mike Bailey.

Othello City Administrator Ehman Sheldon says the ordinance will create "parity" among all food processors needing city water. He also said the city council's decision was driven by Simplot's water contract ending in December. A city council committee started negotiations with Simplot in March.

The ordinance doesn't apply to businesses yet because no one is using more than 30,000 units per month. And Othello's second largest water user, potato processor McCain Foods, has its own well.

"I just don't think there's parity between these two plants," said Councilman Marc Spohr.

He later voted to approve the contract and ordinance change.

"I'm always on the fence on this one," Spohr added.

"You always heard Simplot got a honey of a deal compared to McCain," Mayor Shannon McKay said.

Simplot paid the city $345,360 for water this year for about 866 million gallons, said Bailey.

The new contract states that Simplot's rates will increase from 42 cents per unit in 2008 to a possible agreed upon high of 52 cents per unit in 2012. Simplot's undetermined 2008 water rate will be stated in the city's ordinance for large industrial water users.

Simplot spokesman Rick Phillips said on Wednesday the company couldn't have absorbed the rate increase in one year without layoffs or production changes. Simplot employs 372 people at its Othello plant, he said.

"We really appreciate the leadership of the city," he said.

Councilwoman Kathy Carlton was absent from the meeting.