LUB mulls water

Loudon Utilities Board discussed Dec. 12 selection of a construction manager to complete system upgrades and expansion of the water treatment plant and proposed rate increases to pay for the projects.

The projects will take multiple years to complete and cost “tens of millions,” LUB General Manager Ty Ross said. Much of the work is mandated by Tennessee Department of Environment and Conservation.

The utility selected Brassfield and Gorrie for pre-construction services. The Birmingham, Ala.-based company is one of the largest privately held construction companies in the U.S. The contract will be for $310,000 and must be approved by a vote of the board.

Brassfield and Gorrie was selected using an evaluation criteria that included the consideration of three companies.

Josh Benton, senior project manager, said the company was involved in numerous water and wastewater projects in the Southeast. He said such projects are complicated and require close management.

A contract with Barge Design Solutions for $5.92 million for full services throughout the contract was also discussed.

Ross said the utility has been exploring how to pay for the expansion projects.

Based on the 2022 Water and Wastewater Cost of Services Studies performed by accounting firm Jackson Thornton, the water department was short $5.18 million of about $13.6 million needed for infrastructure improvements.

The goal is to try to address current shortfalls in revenue needed to pay off about two-thirds of the cost of the expansion projects within roughly two years. The rate adjustment during the final two years will be determined when more accurate capital project costs are determined.

During the first two years, water rates for residential customers are expected to rise by $15.27 a month. Commercial rates will rise by $39.84.

The wastewater system is short by $1 million of about $7.2 million needed. The utility wants to fully fund the revenue requirement over four years with $555,000 to be recovered in the first two years.

Increases needed to meet the goals of the plan include raising the monthly charge for retail customers by $6.86 over two years. Large industrial customers would see an increase of 20 cents per gallon over the next two years. Tellico Village Property Owners Association customers would see a rate increase of about 2 cents per gallon.

The increases will keep the utility within the average rates in the region charged for water and wastewater, Ross said. A rate comparison with other systems shows LUB customers will still pay below average, he said.

The board also discussed vacation accrual policies for employees. LUB is considering allowing all employees to employ and bank vacation. A certain group of utility workers are not allowed to accrue vacation because of a labor agreement negotiated in the past.

“Vacation was a bargaining chip with the union,” Chairman Don Campbell said.

The resolution under consideration would put all utility employees under the same policy.

Board member Carlie McEachern asked how long vacation could be accrued because he was concerned time off could be banked for many years and then cashed out at the employee’s increased rate of pay. He said he would prefer vacation pay be cashed out at the end of the year.

Ross said employees can only bank vacation for 480 hours.