Water and wastewater rates were on the top of the agenda at Monday night’s LaFollette Utilities Board (LUB) meeting.
“This is something that we needed to do a couple years ago,” said LUB General Manager Kenny Baird as he began the discussion of the rate proposal and increasing the water and sewage rates.
The current rate structure has been in place since July 2005 and is in need of an update, according to Baird.
Increasing the water and wastewater rates became an issue at last months meeting, when Baird informed the board that as a result of the water and wastewater being in the negative, the utility company was being denied stimulus funding and grants from the state.
“We have to raise rates and at least break even to be eligible for this funding,” Baird said, explaining that the utility must be able to prove it has the funds to cover the debt services.
The proposed rate structure would require two increases, one beginning in January 2010 and the next in July 2010. Each increase would be a little over a dollar, according to Baird.
For example, a $10.45 minimum bill, inside the city limits, would go to $11.50 in January, and in July, the $11.50 average would increase to $12.65.
“This particular rate increase would be just enough for us to break even,” Baird said.
He pointed out to the board that even with these increases, LaFollette Utilities would still have lower rates that surrounding utilities.
“To put this into perspective, Caryville Jacksboro Utility’s minimum bill runs around $16 inside their city limits; we would still be lower than the local average,” Baird said.
The proposed structure was reviewed and approved by Municipal Technical Advisory Service (MTAS) before Baird brought the proposal before the board.
Based on the recommendation of the MTAS consultant, Baird said he feels this is the minimum amount the rates can be raised and the water wastewater system still break even.
“We’re actually bleeding cash in the sewer system,” Baird said.
“Everyone knows that you can’t have a business losing money,” agreed board member Mark Hoskins. He asked if Baird had literature and mandates from the state informing the utilities that they would not be eligible for stimulus funding without raising rates.
“Yes,” Baird replied.
“We have certain standards that we’re supposed to meet, we’re talking about potable drinking water and wastewater that has to be clean enough to put back into the environment,” he continued.
The stimulus funding, if received would aid the utility in upgrades on the water and wastewater system.
“A gallon of water will still cost less than a penny, even with the new rates,” Baird stated.
Hoskins made the motion for the utility board to approve the proposed rate structure in order to take it before the LaFollette City Council for review and ratification. The board agreed unanimously. Baird said he would set up a joint workshop with the council as soon as possible. He also said he planned to invite MTAS engineers, and other industry experts to be at the meeting as well.
Other business discussed at the meeting was the acceptance of the bid for painting the Pine Crest water tank. The utility received several bids across the board. The highest bid came from TMI Coatings, Inc., out of St. Paul Minn., at $154,800. The lowest bid came from Preferred Sandblasting, out of Shelbyville, at a cost of $46,741. Baird recommended to the board it accept the lowest bid, which it did.
“We want to get this done before fall, when it turns cold,” Baird said.
The board also approved the application for a TML Safety matching grant in the amount of $2,000. If received, the funding would be used to offset the cost of flame retardant clothing required for some of the employees.
“This is one of those grants we try to apply for every year; it just helps us out with some of our safety costs,” Baird said