UMRB May Take Up DUD Issue Thursday

October 2, 2012
Dwayne Page

The Utility Management Review Board (UMRB) will meet Thursday to discuss a petition challenging the DeKalb Utility District water rate increases, quality of service, and the proposed water treatment plant. The meeting begins at 10:00 a.m. at Legislative Plaza in Nashville. The UMRB reports to the Tennessee State Comptroller, and they have added this issue to their monthly agenda.

Smithville Mayor Jimmy Poss and Secretary-Treasurer Hunter Hendrixson, who both plan to attend, informed the aldermen of the meeting Monday night and invited anyone who wants to attend to go along.

Although the issue is on the UMRB's agenda, it could be continued or delayed until next month or beyond. Two of the lawyers Vester Parsley and Bill Purcell, representing the city in the matter cannot attend. The DUD wants to proceed hoping for a quick resolution.

In the meantime, the DUD has presented the city a proposed 30 year water contract for review. The DUD's current ten year contract with the city ends in early 2014. The DUD currently buys water from the city at $2.00 per thousand gallons and the rate increases by five cents per thousand gallons each year.

"They have presented a 30 year contract for us to review," said Secretary-Treasurer Hunter Hendrixson. "I'd like to sit down, whether it be informal or whatever to discuss what we want, what they want and if we can resolve it in a 30 year contract or whatever, I'd like to go that route. They (DUD) have requested some more public records which I will have for them this week. We're just conversing right now back and forth by certified mail," he said.

Alderman Tim Stribling said he would like to see a study done on the city's cost of producing a gallon of water. "One of those things they've (DUD) proposed is a cost study. Because we don't know, with the new (city) plant, what it cost to make a gallon of water and what to sell it for," said Stribling.

"Nobody can tell me what it cost to make a gallon of water. We've updated the plant and spent a lot of money. We've got a lot of factors involved. Depreciation and all sorts of things. We need to know for our purpose," he said.

"Regardless of what happens with DUD, even if they don't come along with us, we still need to do a cost study for our purposes so we know what it cost to make a gallon of water so we know what to charge," added Stribling.

In the (proposed) contract, they (DUD) are willing to go in halvers with it (cost study). We do need to know and I don't blame them for wanting to know," said Hendrixson

The proposed contract states that "The initial rate for water furnished by the seller (city) to the purchaser (DUD) shall be subject to and in accordance with a Cost of Service Study. The parties shall have prepared and jointly fund a Cost of Service Study that shall serve as the basis for seller's allocated revenue requirement on a per thousand gallons of water basis to the purchaser." "The COSS shall adhere to industry accepted Cost of Service methodologies such as the latest edition of the American Water Works Association's principals of water rates, fees, and charges M1 Manual of Water Supply Practices or other methodologies mutually agreed upon by the parties. During the term of this agreement, seller agrees to continue to treat purchaser as a separate customer classification for water rate setting purposes in any COSS performed."

"The parties shall agree on any entity to perform the COSS as set forth above, so as to be unbiased as reasonably possible. Commencing on the first anniversary of the affective date of this agreement and thereafter on each anniversary of the affective date, the rate for water furnished by the seller to purchaser per the COSS shall be adjusted by a percentage equal to the percentage of the Consumer Price Index for all Urban Consumers, not seasonally adjusted, as published by the United States Department of Labor, Bureau of Labor Statistics, during the preceding twelve month period."

"I think everybody is in agreement that we can't sell water to somebody else at a loss," said Alderman Shawn Jacobs.

"If we're going to enter into a contract, we don't want to overcharge. We need to work together," said Alderman Danny Washer..

"If it doesn't cost as much as what we think it does, we could roll it back," added Mayor Poss. "I've told them (DUD), I'm open to sitting down and talking to them," he said.

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