Average water bill may go up $7

Friday, September 3, 2010

A state accountant has applied approximately $210,000 from miscellaneous revenue to Lewisburg's Water and Wastewater rate hike calculations and thereby reset the proposed increase in water prices to $7 per month for an average city household.

With that approach to the utility's budget, the Water and Wastewater Board on Wednesday voted to recommend a third rate schedule to the city council for adoption on three successful votes. The first of those meetings is scheduled for Tuesday at 4 p.m. in City Hall.

Two previous recommendations from the utility to the council failed amid discussions motivated by Councilman Robin Minor who's sought to shift the brunt of the rate hike on people who don't live in the city.

Discussion of the new rate hike took another direction during the utility board meeting at noon Wednesday when Mayor Barbara Woods traced the origins of the state's examination of the city's sewage collection system to complaints by residents after the Lewisburg Community Walkway opened about five years ago.

The walkway, dubbed a greenway in other communities including Murfreesboro, is generally parallel to Rock Creek. Like creeks, streams and rivers, the contents of sewer pipes flow down hill, thereby making pipe placement parallel to waterways a logical avenue.

Lewisburg's sewage treatment plant can fully process a wastewater flow of three million gallons a day (3 mgd). In 1986, the Tennessee Department of Environment and Conservation authorized use of a swirl device that allowed 7 mgd to pass through the plant with partial treatment because solids were removed.

Nearly a quarter century has passed. The Clean Water Act of 1972 brought requirements for sewage treatment plants and the federal law has been amended and interpreted by federal courts forced to examine congressional intent because of lawsuits brought by private environmental groups.

During the decades since the swirl device was installed, old pipes have cracked and stormwater has seeped into city sewers and residential service lines to sewer taps, thereby increasing the flow of wastewater.

Now, the extensive system of collection pipes is also a holding system for what the treatment plant can't process and that's resulted in overflows from sewer manholes viewable by the general public that's using the community walkway.

"Then the public asked for something to be done," Woods said Wednesday as she traced the origins of the current issue - water rate hikes needed to pay for a project that's to double the treatment plant's capacity to 6 mgd.

"A lot of times," the mayor said, "we ask for something, but it costs something."

Water and Wastewater Superintendent Kenneth Carr on Wednesday released a proposed schedule of water and sewer rate increases. Another chart, based on the proposed rates, shows the following increases for an average household, assuming average water consumption. Those increases are as follows. Different average usage rates are indicated. Rural customers use more for agriculture. Cornersville usage is greater because of agriculture and more people per household since Lewisburg has more apartment dwellers.

* $7.09 per month is the anticipated average increase for residents of Lewisburg paying water and sewer bills.

* $4.94 is the anticipated average increase for residents outside the city who only buy water. That water price hike might be compared to the increase in water service for Lewisburg residents which is $2.75. City customers' average sewer bill would go up by $4.34.

* $10.14 is the anticipated average increase for residents served by the Lewisburg-owned water and sewer system at Cornersville. The water price hike would be $4.76. The sewer bill increase would be $5.38.

* $39.21 is the anticipated increase for water service to an average business in Lewisburg, based on consumption of 23,500 gallons monthly.

These figures do not include the tax on water. There's no tax on sewer service because it's not a product. Tennessee does not charge sales tax on services.

Dale Hagar is the state accountant serving the State Revolving Fund based in Nashville. It's the source of the money to be borrowed to pay for an expansion of the sewage treatment plant estimated at a cost of $13 million with a large holding tank to hold excess wastewater flowing to the plant when rain seeps through the ground and into sewers.

The increased rates will give the city utility an adequate amount of revenue to repay what's borrowed for the construction project. Adequate revenue must be demonstrated before the money is loaned.

A conventional municipal bond would cost about $6.5 million more because the revolving loan fund rate is considerably lower than the four percent cost of money borrowed by selling income tax free bonds, Carr explained.

"I know there are some thoughts about just telling EPA (the U.S. Environmental rotection Agency) that we won't do it," Carr said, warning against that. "They have the ability to strong arm us."

State and/or federal control of the utility is possible, he said.

"I don't think anybody likes the timing of this," the utility superintendent continued.

The only advantage he cited for this happening now is the $2 million available through TDEC in the form of a forgivable loan. The $2 million principal would not have to be repaid.

The state accountant serving the State Revolving Fund examined the city utility's budget and found that penalties, service charges, tap fees, late charges and other miscellaneous revenue had not been applied as a dedicated revenue stream to repay borrowed money for the plant expansion, Carr said.

A report based on information from City Hall last week said that depreciation was a problem and that increased the cost of the rate hike. Carr said on Wednesday that depreciation had already been figured into the utility's budget.

Still, the rate hike will be approximately 17 percent, as previously reported, and that's consistent with what the mayor recalled from conversations with Hagar in recent weeks.

Early this week, Woods said that city leaders were trying to find ways to restrict the rate hike. As ideas came to mind, they were suggested and dismissed as having been applied, tried, or found impossible.

However, she endorsed the view that given the residents' original complaints about wastewater seen flowing from man holes, the results suffered now are not a whim of the water department and that the city faces a director's order from the man running a division of the state department of environment and conservation to have all the sewage biologically treated as mandated by Congress.