Contract to Help Finance New Pipes, Tank

Contributed by: Ann Hinch on 11/23/2006

A third year of negotiation hasn't put LCUB (Lenoir City Utilities Board) much closer to building a million-gallon water tank near Interstate 40 off State Highway 321.

As with last November, the utility is still hashing out right-of-way issues with heirs of the late J.C. Ross, who own a small property LCUB deemed ideal for the tank, though all parties did finally agree where to build it, said LCUB Assistant Manager Shannon Littleton.

Over the summer, LCUB installed a 16-inch water line along 321 between Eaton's Crossroads and I-40 to feed properties city council had annexed. In June, the board awarded a contract in the amount of $734,100 to The Crom Corporation of Florida to construct the tank.

"It's still good for right now," LCUB Water/Sewer Manager Greg Jones said of the bid, though he added Crom may request more money if materials or labor costs increase because of further delay.

Once built, the tank will serve as storage for the existing water line along I-40 and provide pressure for firefighting. It may also help with a new contract the board approved at its Nov. 20 meeting, to sell Watts Bar Utility District (WBUD) water from that access point, partly for the Roane County Industrial Park and to service any development at the new I-40 interchange with Buttermilk Road.

Under the 20-year contract - which will come up for renewal every five years - LCUB will purchase water from First Utility District of Knox County (FUD) for $1.04 per 1,000 gallons, then sell it to WBUD for $1.29, the same price LCUB charges existing bulk users.

Jones said this price is not fixed and will vary with the bulk rate. He explained LCUB's 25-cent profit will help retire the debt service for the nearly-$1.1 million water line on 321 and the tank, and provide maintenance funds for both during the contract period.

LCUB board member Eddie Simpson worried if FUD rations water as it did this summer, LCUB may be held liable for any shortage to WBUD. Jones said the contract allows LCUB to cut back on supply with FUD, and explained WBUD still has a back-up water feed from Kingston.

In other news, Susan Williams, manager of accounting and finance, reported the utility's billing office is no longer taking credit card payments by phone or Internet - a fact some LCUB customers have learned the hard way.

Texas-based EDS began processing credit card payments Nov. 1, and Williams said she's been "taking a beating" from customers over the new service fee. EDS imposes a $1,000 single-charge limit and charges $4.50 in addition to the bill to customers paying by credit card.

Williams explained none of this $4.50 goes to LCUB; in fact, part of it ultimately goes to credit card issuers such as Visa, MasterCard and the like. These issuers charge businesses a fee for accepting their cards - for the approximately 10 years LCUB processed cards, Williams said it never charged those customers extra and has, instead, "eaten" those fees.

Last year's credit card fees exceeded $250,000 for LCUB. Williams said it seemed wiser to turn the collection over to EDS to both free office staff for other work and to keep from spreading these fees across all of LCUB's residential customers, many of whom don't pay by card.

"I see people who just struggle, who pay (by other methods)," she added. "And (adding a fee they don't incur is) not fair."