Utility rate hike anticipated here

Friday, May 7, 2010

A rate hike is to be considered Thursday and again a week later by Lewisburg's Water and Wastewater Board of Directors, largely because of state and federal requirements for expansion of the sewage treatment plant.

"I think there will be a rate increase, possibly," utility Superintendent Kenneth Carr said. "Due to economic conditions, we do not want to raise them any more than what is absolutely necessary, but we must support ourselves."

State law requires utilities to be self-sufficient. Ratepayers, not taxpayers support utilities in this state.

"It must pay its operating expenses and debt service with rates and not tax money," Carr confirmed.

"Operational costs are increasing," the superintendent said of higher costs for products and basic materials. "And debt service costs will definitely increase because of the TDEC/EPA mandate" from the Tennessee Department of Environment and Conservation and the U.S. Environmental Protection Agency.

The state department enforces rules from the federal agency and both say "that we increase our sewage treatment plant's capacity from three million gallons a day to six mgd," Carr said.

"That will cost approximately $13 million," he continued. "We won't know for sure until we bid it, but that's the engineer's best estimate."

Doubling the plant's capacity comes with a huge holding tank so sudden increases in flow from collection pipes - such as experienced last weekend because of heavy rain - can be held to give time for complete treatment.

Financing that will probably take 20 years, Carr said.

"That's usually our shortest time," he continued, explaining, "Usually updates last 20 years, so you don't want to be paying on one when you do another. We will most likely structure the debt repayment with interest payments only during the first two years of construction. Then the principal and interest payments would be made over the next 18 years."

These considerations come as local leaders assemble figures for annual budgets starting July 1.

Like others facing such tasks, Carr knows personnel costs are the largest part of most budgets.

"I'm going to do a budget on a zero- and a budget on a 3 percent pay raise," Carr said. "I know what the public will say; 'Oh no,' but we didn't give a pay raise last year and expenses continue to go up."

The utility's budget was set last summer at $5.26 million.

The city sells water to the Marshall County Board of Public Utilities. It serves thousands of customers not reached by municipal utilities.

Carr and MCBPU Superintendent Tommy Whaley spoke this week about water rates.

"We had a long discussion but nothing came from it," Carr said. "We're in agreement with everything except the rate and I don't think there will be a major disagreement over that."

Lewisburg's Water and Wastewater Board is scheduled for a nonvoting budget workshop at 4:30 p.m. on May 13 and its regular monthly meeting is at 4 p.m. May 20, another Thursday.

"I will definitely say something at the monthly meeting" about a water rate hike, Carr said.

Meanwhile, Lewisburg's utilities "were very fortunate" when major rainstorms crossed Middle Tennessee. "We had no abnormal problems for the system," Carr said.