Growth generates challenges for utility

Retiring LCUB official says balance between upgrades, rates found

Hugh G. Willett
LENOIR CITY - Utility companies face the constant challenge of upgrading technology and infrastructure while keeping rates at levels customers can afford, said Fred Nelson, general manager of Lenoir City Utilities Board.

Nelson, who announced his retirement earlier this week after 43 years with LCUB, said the utility has been facing those same challenges since he started as a ground crewman after his discharge from the Marine Corps in 1966.

Back then, linemen handled live wires with wooden poles, and hardhats were optional. Today, the lineman's job description includes lots of mandatory safety training, he said.

LCUB had about 12,000 customers and 24 employees in 1966. Those numbers have grown to 140 employees and about 60,000 customers.

In the 1970s, it was the explosion of growth in West Knoxville that challenged LCUB to meet increased demand. The Fox Den subdivision in Farragut was the first underground electric infrastructure LCUB installed, he said.

"At one time, we were the fastest-growing utility in the state," he said. "We had to borrow a lot of money."

Nelson said he believes LCUB has done an excellent job of keeping up with technology and increased demand without overburdening its customers. Twenty years ago, the utility typically went to the bond market every three years, he said.

"We've not been to the bond market since 2001," he said.

In 2007, at the height of the building boom, LCUB took on 300 new customers in a single month, he said. Four new substations have been built in the last four years, he said.

Currently, the utility faces the need to upgrade to new meters that can be read remotely.

The rising cost of copper wire also is a challenge, he said.

"We've been recycling the copper and limiting our scrap," he said.

The recession also has created challenges.

The recent announcement that auto parts maker PBR Knoxville will close shop in 2010 is another blow to the utility. PBR, which has a manufacturing plant in WestBridge Business Park in West Knox County, was LCUB's largest customer, Nelson said.

"It's going to be a big hit on our budget," he said.

Water, gas and sewer create their own challenges.

Much of the Lenoir City water and sewer infrastructure was installed 50-75 years ago. Lines have become clogged and pressure has dropped to critical levels in some parts of the system, he said.

"We're in the process of replacing all the water lines," he said.

A $15 million water treatment plant under construction will help ease the burden on the current system, but it has come at a heavy price. Customers such as Wampler's Sausage and Elm Hill Meats took a big hit in terms of increased rates, he said.

"When you've only got 5,000 sewer customers, it makes these big investments hard on the bill payers," he said.

East Tennessee is fortunate to have the Tennessee Valley Authority overseeing its power needs, Nelson said. The area probably will see the comeback of big investments in nuclear power as the need for electricity grows, he predicted.

Nelson said he plans to spend his retirement with his grandchildren, and he hopes to get in some exercise walking and playing golf.