Loudon Utility Board water customers will face rate
increases beginning Jan.1, 2011. Those increases may not be applied
to Tellico Village POA customers, however, because the contract
wording does not authorize the increase.
The LUB Monday approved rate increases of 7.5 percent for the next
three years. The rate hike is needed to generate revenues to repay
the cost for a planned water plant expansion. The increase is
expected to generate an additional $345,000 per year by the year
2013, when expansion should be completed. Along with additional
funds generated by increased capacity needs by one of LUB's
industrial customers, the board expects to generate the $900,000
necessary to cover the expansion debt service.
LUB Manager Lynn Mills said the increase, for Loudon customers,
will translate to an additional 88 cents per thousand gallons water
in the first year, 92 cents per thousand gallons the second year,
and $1.02 per thousand the third year.
The increase will not apply to TVPOA because of one word in the
contract - "new," Mills said. He told LUB members he had consulted
with attorneys, and the attorney's opinion was that the project did
not meet the requirements of the contract. "I do not feel the
capacity expansion would fall under the category of 'new 'regulatory
requirement and be accepted by the TVPOA as justification for a rate
increase," Mills said.
The POA contract states: "If, as a result of any new federal or
state regulatory requirement promulgated after July 1, 2002, LUB
incurs an increased cost in providing treated water to its customers
the price may be increased by the direct amount needed to meet the
new regulatory requirement."
The contract is a 20-year contract that is in effect until Dec.31,
While the water plant expansion is required by the state and federal
regulating authorities, it is not a new requirement. The EPA
requires expansion when a system reaches 80 percent of its capacity.
The water plant expansion will take the department's capacity from
12 million gallons a day to 20 million. In addition, it will involve
installment of a new intake pipe in a different area of the
Tennessee River, which will provide better quality and quantity of
Mills said last summer, the water plant treated 11 million gallons a
day on some days, and federal regulations require that at least 20
percent of capacity is kept in reserve in case of emergency.
LUB member John Hutton made the motion to approve the increase in
order to get the loan. When the matter came to vote, board member
Michael Cartwright said, "Put me down for a 'no', if you're not
going to raise Tellico Village rates along with this."
Jack Randolph, LUB board president, said he never felt a 20-year
contract should have been signed. "I agree with you (Cartwright),
but there is nothing we can do a about it," Randolph said. "We
should have never got into a contract like that." He suggested that
the board seek negotiation on the rate.
Cartwright said, "I say we vote to raise theirs too, and then if
they want to go into mediation..."
However, the motion was on the table, and the vote to approve the
increased passed with only Cartwright dissenting.
John Cherry, TVPOA public relations director, said Tellico Village
maintains its own public works department. Village water is
purchased from two sources - TAS (Tellico Area Services) and LUB,
which supplies water to 80 percent of Village homes.
"Our water and sewer departments work closely with LUB to get the
chemistry from the two suppliers as close as possible," Cherry
said. The contract agreement included language to help keep costs
between suppliers equitable, Cherry said, but also to allow for any
increases mandated by new federal or state requirements.