The Loudon Utility Board will be considering a water rate increase to finance the $17 million expansion project of the Loudon Water Treatment plant.

 
Lynn Mills, LUB general manager, told the board Monday that the State Revolving Loan Fund recommends a 12 percent increase  in the existing water/wastewater rates. "We're getting close to preliminary engineering on the water treatment expansion, and state revolving loan fund recommends a minimum rate increase of 12 percent," Mills said. 

Mills said the utility needs $900,000 in additional revenues accumulated by the time the expansion is completed and repayment of the revolving loan funds begins. 

Because the Loudon Water Department is separate from the Wastewater Treatment plant, Mills said he removed wastewater fees from the equation. He recommends a three-year 7.5 percent increase, beginning Jan. 1, 2011.

The project is targeted for completion in 2013. Construction will take at least two years. Discussion about the proposed expansion has been ongoing for years. 

"We had been doing the engineering work, but when the economy slowed down, we sort of slowed down too," Mills said. "Then, last summer, we hit high peak days that made it evident we would have to go ahead."

The Water Plant expansion will take the department's capacity from 12 million gallons a day to  20 million. In addition, it will involved installment of a new intake pipe in a different area of the Tennessee River, which will provide better quality and quantity of water.

Mills said last summer, the Water plant treated 11 million gallons a day on some days, and at least 20 percent of  capacity is supposed to be kept in reserve in case of emergency.

Industrial customers, including some also undergoing expansions and needing increased usage, will generate a large portion of funds for the expansion. The board will look into whether the Tellico Village Property Owners Association customers can be assessed the increase.

The proposed water increase will be placed on the agenda for the Oct. 25 meeting.

Jack Randolph, LUB chairman, said, "I don't see that we've got any choice."