September 25, 2008

• Possible sewer rate increase

BIRMINGHAM, Ala. - Insurance companies tied to the $3 billion Jefferson County sewer system debt have asked a judge to immediately place the system's control in the hands of a court appointed receiver, according to the report by the Birmingham News.  The county has worked for more than six months to renegotiate its debt with creditors into affordable monthly payments.

"The insurers believe the Jefferson County Commission is stalling, leaving them [the insurers] on the hook," said Andreas Rauterkus, assistant professor of Finance at the University of Alabama at Birmingham.  "Now the insurers are saying we need someone to take this over, and a receivership will put someone else in charge of the sewer with that person deciding what needs to be done."

Rauterkus said having a receiver placed in charge of the sewer system in an effort to settle the debt crisis could lead to rate increases for sewer system customers.

"A judge-selected receiver could decide that the only way out of this mess is to raise rates on customers to settle debt payments.  That is possible," Rauterkus said.