-LCUB Raises New Sewer Fees

Contributed by: Ann Hinch on 8/24/2006

A month after raising tap fees on water-line connections for new customers, LCUB (Lenoir City Utilities Board) did the same with sewer line fees at its Aug. 21 meeting.

With a state-ordered $8 million wastewater treatment plant upgrade and approximately $6 million more needed for sewer line improvements in Lenoir City's future, the board decided the higher one-time fees for new residential and commercial customers was the best way to raise additional money for both.

Accounting and Finance Manager Susan Williams explained the last time LCUB raised tap fees was 1999, and it has not increased capital reserve and maintenance fees since 2002. Tap fees are charged for tying onto a main line, and the other two fees are just as they sound - to finance new projects and maintain existing sewer lines and treatment facilities.

Williams believes LCUB should reexamine both sewer and water fees each year. "Technically, every time we give (employees) a raise, these should be going up," she said.

The old sewer tap fee for all new construction was $650; it has gone up to $1,200. Capital reserve and maintenance fees have risen to $1.50/gallon and 30 cents/gallon, respectively. These are one-time fees calculated on average daily use, explained Greg Jones, LCUB water and sewer supervisor. For example, a household estimated to use 145 gallons/day would pay $261 ($1.80 x 145).

In addition, the board fixed a one-time special assessment fee on all sewer hookups. In October 2002, it approved the fee to recover capital expenses in the sewer department, but levied it only on new homes along State Highway 70 benefiting from the Town Creek line extension, namely Avalon, and new commercial/industrial everywhere.

LCUB has raised the commercial fee from $1,500 to $2,500, and established residential special assessment for all new homes to hook on. Single-family houses will be charged $1,000 and multi-family dwellings, $600 each unit.

LCUB member Eddie Simpson pointed out First Utility District, which also services the area, does not charge a special assessment on top of its residential tap fee (which is, according to Jones, $1,150).

"First Utility District isn't in the shape that LCUB is in," Jones noted, referring to the directive from Tennessee Dept. of Environment and Conservation to upgrade the city's treatment plant by 2009.

"We've got lots of problems, to say the least," said Shannon Littleton, assistant general manager and attorney for LCUB, referring to the cost of satisfying the directive and line upgrades needed to accompany it.

Simpson reminded the board of a sewer rate/fees study begun several years ago, which was never completed because of a change in management. "If we'd known (projected costs) two or three years ago, we could've brought (increases) on a little at a time," he said, in favor of completing the study.

General Manager Fred Nelson had earlier said LCUB is consulting with municipal advisors through UT about rates on existing sewer service. LCUB uses a declining rate system, which charges less per gallon for high-usage customers.

Littleton said this makes no sense, since it costs the same per gallon to treat all of it - it doesn't get less expensive, the more there is. In addition, Williams noted the cost of materials for sewer pipes, which use petroleum, keep rising.

What LCUB may do is go to block-pricing - charging a set fee for each "block" of usage in a month. Whether basic rates will go up is undecided. "That is really some in-depth study (you need to do), when you start changing the rate structure," Williams explained.