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LCUB, FUD rate hikes discussed

Could a rate increase be on the horizon for Lenoir City Utilities Board customers?

That was the question at LCUB’s monthly board meeting, Monday, Oct. 19.

The Board authorized seeking bids for the Utility’s Phase III wastewater treatment plant improvements project.

LCUB is under state mandate to improve the wastewater treatment plant with a looming deadline, although Phase III is not part of the state’s immediate requirements.

However, total cost of Phase III, which eventually would need to be completed is about $4.5 million. If the Utility approves going ahead with the project, it would qualify for $1.8 million in stimulus funding.

“It really is whether the Board wants to be in the running for that money or not,” Lenoir City Mayor Matt Brookshire said.

Paying $2.7 million out-of-pocket is better than paying more than $4 million, he added.

Councilman Tony Aikens asked if going ahead with the project now would cause a rate increase.

After some discussion of numbers, accounting finance manager Suzan Williams said, “We’re cutting it close.”

“I don’t see how the people of Lenoir City can afford another rate increase,” Aikens said.

However, Williams said she couldn’t say for sure if the project would warrant a rate increase without seeing specific numbers.

Aikens moved to seek bids, a motion Coucilman Buddy Hines seconded, both noting if the bids were high, they simply could not award the contract.

The motion was unanimously approved.

The Board also approved a counter-proposal to First Utility District in a water purchase agreement.

LCUB purchases water from FUD, and FUD’s Board recently upped the rate at which LCUB will have to pay: $1.81 for the first 875,000 gallons per minute, and $1.91 for all water after that.

Former LCUB GM Fred Nelson wanted that changed to $1.70 for the first 1.1 million gallons, and $1.91 for everything after that.

“Let us step into this thing gradually for our rate payers,” Nelson said.

In other words, if First Utility raises rates because it costs them more to produce water, those increases will be passed to LCUB, and to LCUB customers.

The contract proposed by FUD also would put LCUB under contract to buy water from the other utility for 20 years.

“We can’t build a water plant in less than 20 years,” Nelson said, adding he would prefer a 5-year contract.

“We need to be self-sufficient,” he added.

Another aspect of the problem is that LCUB now is serving as a water provider to Watt’s Bar after the Kingston ash spill.

“This is a very complicated issue,” Greg Jones, water and wastewater management, said.

If LCUB gets a rate increase, so will Watt’s Bar, Nelson said.

LCUB attorney Shannon Littleton also brought up a study of LCUB’s water department, which the Utility will use as statistical evidence of how much water it actually uses.

The Board unanimously approved paying for a study.

Pat Beasley then moved that LCUB counter-propose paying the $1.70 rate for the next six months, until the Utility can complete the study, then pay retroactively if needed.

Aikens seconded, and the motion was approved with former Farragut alderman Joel Garber abstaining, saying he was an FUD ratepayer.

However, that leaves the ball in FUD’s court.

“I don’t know if their Board will approve this, even if you do,” Nelson said.

In other business, the Board:

• Approved the purchase of a 2010 digger derrick truck for $167,078

• Awarded a bid to Brown Painting Co., in the amount of $74,680, for painting the Fifth Avenue water tank

• Approved Online Information Services Inc. DBA/ Online Collections as the collection service for delinquent LCUB accounts


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