CH water, sewer on tap for increase

Friday, January 18, 2019

“Treat it like a Band-Aid and rip it off,” said Alderman Brian Williams.

The Chapel Hill Board of Mayor and Aldermen shared that opinion at their Monday night monthly meeting regarding a proposal to increase water and sewer rates in town.

The town’s water board recommended that the full board adopt a new rate structure, which will lower bills for some residents while others see increase of up to 50 percent depending on usage.

“I’ve beat my brains out on this,” said Mayor Jackie King of the town’s need to balance the budget for the water system.

The town’s water and sewer system is budgeted to lose $300,000 this fiscal year. This would be the third year that the system, due to its small customer base and increased costs of maintaining a water treatment system, has posted a negative change to its net position.

State law mandates that after two years of losses that the system presents a plan to fix the situation or be subject to takeover by the state, which will raise rates as necessary without local input.

“We can raise it or let the state take it over and do it,” said one aldermen.

“I think we have to do it and do it all at once,” said another, reflecting the opinion of the board as a whole.

The Municipal Technical Advisory Service presented their recommendations to avoid that scenario in November, based on the town’s need to increase revenue and a rate study of the utility. They recommended two alternatives; one would have increased water rates under the current rate structure by 30 percent on Jan.1 and a further 15 percent on July 1. The second, adopted by the town, simplified the town’s rate structure for water service while also increasing revenue.

The new rate structure avoids a across-the-board increase, which aldermen were concerned would place an added burden on fixed income residents.

Currently, the town charges $16 per month for the first 100 gallons of water used and $2.66 per thousand gallons up to 15,000 gallons a month.

The simplified rate will charge $22 per month for the first 2,000 gallons and $6.40 per thousand gallons after that point.

The rate increase does accomplish one of the board’s main goals, minimizing any impact on very low use households, especially the elderly.

Several case studies presented by MTAS showed that for users of less than 1,000 gallons per month

The lowest use customers should see a decrease in their cost with the new plan, while those using more than 7,000 gallons a month could see increases as high as 80 percent.

Williams noted that if the town had raised rates a small percentage each year the need for a large increase like this one could have been avoided.

A resolution will be prepared for next month’s board meeting outlining the details of the new structure for a vote.

In December, representatives of Tennessee American Water, a publicly traded water and waste water contractor whose operations in Tennessee are centered in the Chattanooga area, presented to the board with an initial proposal to potentially purchase the system from the town.

Details of any potential offer would still need to be worked out if the town chose to go that route, but the time required to reach any agreement still required a rate increase to avoid the state stepping into the matter.