[Nameplate] A Few Clouds ~ 81°F  
High: 83°F ~ Low: 60°F
Wednesday, July 30, 2014

County water bills could rise 34%

Friday, October 24, 2008

A 34 percent rate hike was recommended Monday to Marshall County's Board of Public Utilities and water directors decided to address the issue next month for nearly 10,000 residents who use that service.

A multi-million dollar, 57-mile water line extension project is cited by MCBPU's consulting engineer as increasing costs without counterbalancing growth in customer base to explain the utility's first rate hike in 16 years.

"Based on the projected deficit in 2010 of $471,845 and 2008 water sales of $1,440,226, a rate increase of 34 percent is recommended," according to a report by Consolidated Technologies Inc., as delivered to utility board directors by CTI's Neal Hall.

"The expansion ... has required additional debt..." the report states. "These factors and others combine to necessitate a rate increase."

MCBPU Director Bill Blalock acknowledged Hall's point that the water service has eroded retained earnings.

"This gives us insight on what we have to do for reserves and what we should have done," said Blalock, who added that he sees an inconsistency among people who might eventually complain about a rate hike, but who apparently prefer to pay for bottled water.

Utility Board Chairman Rocky Bowden noted MCBPU officials "have been talking about building our own plant" to produce water instead of buying it from Lewisburg, but that "according to our studies it would cost more to produce our own."

Previously, rates didn't have to be increasedbecause the utility's growing customer base, Bowden said.

"Shocked" by the recommendation for such a large increase in water prices, MCBPU Director Mary Ann Neill declined to comment on the CTI report until she'd studied the document that includes detailed financial comparisons.

Dated September 2008, the report shows actual operating expenses last year of $1.89 million in 2007 growing to $2.33 million this year and then declining to $2.14 million in 2009, but remaining more than $2 million through 2012.

Revenues exceed spending in 2007, but this year spending is nearly $2,436,000 while revenues are at about $2,135,000 leaving a deficit of $301,000.

That's a remarkable figure since it includes adequate facilities tax revenues transferred from the county budget to the utility budget as authorized by county commissioners at $300,000 annually.

The adequate facilities tax is a charge imposed on new construction at 70 cents per square foot. Neill acknowledged that as new home construction decreases because of a poor economy, there would be declining revenues from the tax.

Extending water lines to rural residents was made a priority by county leaders, as indicated by their dedication of a separate revenue stream. However, it's not the only new source of money for the utility.

The U.S. Department of Agriculture described "investments" in the water service during an announcement in July last year.

Some $2,837,000 was provided to MCBPU by the USDA, according to Rural Development Assistant State Director Robert Connelly. That includes a $1,940,000 low-interest loan and a grant of $897,000. Marshall County is to provide an additional $1,500,000 bringing the total infrastructure investment to $4,337,000.

MCBPU has about 3,050 water taps "all over the county," according to utility spokeswoman Gayle Shaneyfelt. The utility's biggest regular customer is Henry Horton State Park. Chapel Hill is the second largest as MCBPU stands as its major backup water supply. The county provided water to the town of 1,000 people on a regular basis for more than a month during the drought of 2007.

The average water customer tap meters about 3,500 gallons per moth, Shaneyfelt said. She calculated that average usage as costing $34.58 now with taxes. If the suggested rate hike is adopted, the same water usage would cost $46.34, including taxes. Such water costs are calculated with a base rate for 1,000 gallons added to the fee for each additional 1,000 gallons multiplied by 2,500 gallons.

Utility board directors received Hall's presentation somberly, but the meeting's mood shifted toward black humor when the consulting engineer dryly reported that he's not attempted to estimate any effect of a theoretical rate reduction from Lewisburg. The city utility treats Duck River water and sells it to MCBPU. The county utility's contract with the city expires in 2010.

Hall spoke briefly about the prospect of phasing in the proposed rate hike. He advised against changing the rate structure as that may only cause confusion.