Lewisburg water rates increase

Friday, June 2, 2017

Lewisburg Water and Wastewater will again present a proposal for water and sewer rate increase to the Lewisburg City Council at Monday’s work session.

General Manager Trigg Cathey will present the department’s case to the council using data from a rate study performed by the Municipal Technical Advisory Service, a University of Tennessee office charged with consulting and training for state municipalities.

The water department has modified their original request at the request of some councilmen.

The initial proposal had called for three percent increases for water each year over a four-year period. Sewer rates would have increased by 10 percent for the first two years and five percent for the final two.

Some councilmen apparently expressed discomfort at voting for increases that would take effect after their terms had ended.

As a compromise, the department will now ask for a six percent increase each year for two years on water rates and a 16 percent each year for two years on sewer rates.

The average family using 3,000 gallons of water and sewer per month would see their bill increase, before sales tax, from $46.24 per month to $57.72 per month after those two years, according to figures from the water department.

Cathey emphasizes that, even with the increase, rates would still be lower than comparable use in Fayetteville, Lynchburg, Mt. Pleasant, or Lawrenceburg.

Lewisburg Water’s case for the increase is based on several studies showing that increasing costs and future demands require it.

The department commissioned two separate studies, one by MTAS and another by a private firm, examining current rates and expenses for the utility. Both concluded that the water department would need to raise rates in order to meet obligations in the future.

A separate examination of the rate structure by the State Revolving Fund Loan Program informed the city that a four percent increase would be required before the SRF would loan money for two projects that the department must soon begin.

The SRF offers low interest loans, with some principal forgiveness, for infrastructure projects in the state but requires sufficient cash flow for service on the debt.

Lewisburg Water has been planning for over a year for the projects that will require a $2 million loan from the fund.

One is a project mandated by the Environmental Protection Agency to further reduce the amount of nitrogen and phosphorous discharged from the wastewater treatment plant.

The $930,000 project is required so that the department can meet tighter federal guidelines.

The refurbishment of the Snell Branch pumping station requires $1.1 million, of which SRF would forgive $100,000 of the principal borrowed.

Half of Lewisburg’s wastewater flows through the 28-year-old station, which needs new pumps to manage the volume.

Due to growth, capacity in the water and sewage systems is also consistently close to 80 percent. Once the system reaches 80 percent consistently the state requires departments to begin planning for expansion of facilities to add more capacity.

The department would like to pay down their approximately $17 million debt load from past projects in order to both improve their cash flow and to preserve their ability to borrow money if large projects are required in the future.

In 2013, the long-term indebtedness stood at $19.4 million.

Additionally, the MTAS study projected that without any change in rates the department would see expenses surpass revenues within the next two years.

By state law, water systems cannot operate at a deficit for more than two years before the state will step in and set rates as they see fit in order to generate positive cash flow.

Cathey hopes that the data will show councilmen that, while the increase is unwanted, it is necessary to the future operation of the city’s utility.

The water department is the only utility required to seek council approval for rate increases.