LUB accepts bid for construction projects; discusses water/sewer rates

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By Charlotte Underwood

At Monday night’s LaFollette Utilities Board (LUB) meeting, members discussed bids for the line construction projects, which are taking place in Norris Point and Flat Hollow.

The projects are large and involve not only tree trimming, but pole setting as well, which is why the utilities is contracting the work out.

“I hate having to contract it out, but we’re in that situation,” said LUB General Manager Kenny Baird. He explained that the Norris Point project would involve setting around 100 poles, all by the end of November.

Three companies responded to the bid. Service Electric Company placed the highest bid at $1,454,036.52, and Dillard Smith placed in the middle with a bid of $1,048,066.48. The lowest bid was $448,784.92 and Galloway Construction, out of Morgan County, submitted it.

“Do we know anything about their work?” asked board member James Walker.

“They have been in business for over 20-years and do the tree trimming and line work for Scott County. They also did some work on the coal mines,” Baird said.

He told the board that Galloway came recommended by the utilities consultant and engineering department.

“We’d be crazy to reject their bid,” said Baird.

The board voted unanimously to accept Galloway’s bid.

“We actually had $1,051,000 budgeted for those jobs, so there’s some capital savings right there,” Baird said.

Baird also briefly discussed water and waste water rates with the board.

“I’ve met with a MTAS consultant and what we’re looking at to be able to bring water and waste water combined to a break even position is two rate adjustments,” said Baird. He suggested the first adjustment would need to be an increase of $1.05 in January of 2010 and the second increase would be around $1.10 in July, resulting in a $2.10 increase on water only. Wastewater would see an initial $1.10 increase in January and a second increase in July for around $1.20. Baird asked the board to keep in mind that these time frames for increase were suggestions and that he and the board still had to meet with the LaFollette City Council to discuss the issue.

Even with the suggested rate increase, LUB would still have some of the lowest water and sewer rates in the region, according to Baird. The average cost for 5,000 gallons of water in the state of Tennessee is $28.67. After both suggested increases, the cost for 5,000 gallons of water in LaFollette would go to $27.17, which is more in line with other utilities, according to Baird.

Baird shared with the board, a letter that he received in response to LUB’s request for stimulus funding for projects.

“The letter states that they can’t give us any funding unless we increase our rates by 17-percent, which is a little less than what I have suggested,” said Baird.

“We need to keep our mind on the fact that if we don’t do this, we are cutting ourselves out of getting money for capitol projects,” agreed board member Mike Hoskins.

Hoskins then suggested a small monthly increase for a year, rather than the two larger increases.

“That way it would impact the customer less,” Hoskins said.

Baird said he was still running numbers and setting up a meeting with the city council.

“I hope to set a joint workshop with the city council soon,” Baird said.

No decisions were made regarding the water or sewer rates during Monday’s meeting.