Surcharge Imposed On Oneida Water Customers

Oneida, TN (2011-01-20) Beginning in February, customers of the Oneida Water and Wastewater District will see an increase in their monthly bill. The surcharge was imposed to offset losses incurred by the district in recent months.

By a 3-1 vote Thursday night with Alderman Cecil Anderson casting the lone dissenting vote, the Oneida City Council approved a recommendation from the Oneida Water and Wastewater Board of Commissioners to impose a flat-rate $4.50 surcharge on all 4495 water customers of the municipality-owned water district. The measure was taken to stave off action by the State of Tennessee, which had been pressuring the local utility to raise rates to offset recent revenue losses and in order to maintain adequate fund balances to satisfy USDA Rural Development grant assurances.

Reading from a prepared statement, Oneida Mayor Jack Lay commented, “The Town (of Oneida) Mayor and Aldermen (have) been reluctant to consider raising rates because of the recent economic downturn. However, after reviewing financial information presented in the 2010 Oneida Water Board Audit and listening to a report from Mr. Johnny Acres (manager of the utility district) on current expenses and revenues, it is obvious that a rate increase is necessary.”

The increase was attributed to a malady of reasons, especially the loss of industry and the rising cost of doing business. “(The district) lost $10,000 a month from (the loss) of Armstrong (Flooring) and Barna (Log Homes),” commented Acres. Furthermore, the district has seen a great disparity between increases in revenue and expenditures. “(In the last ten years), cost of electricity has increased 53.81%; chemicals, 33.81%; liability insurance, 73.86%; employee insurance, 50.23%; and postage, 38.29%,” added Acres. Meanwhile, the district’s revenues have only increased 4.24%. “We don’t have the money to keep going,” surmised Acres.

The district, although it imposed a short lived surcharge in 2007, has not had a rate increase in ten years. This increase is likewise a surcharge; however, it won’t be reduced anytime soon. In accepting grant funds and loans from the Rural Development arm of the USDA, the district apparently agreed to covenants that it would maintain fund balances to assure the government the notes would be paid. “(The district) has made covenants that (it) would maintain certain balances,” commented Dennis Jeffers, the local CPA that audited the district’s books. Presently, the district must keep at least $700,000 in reserve. “You’re not anywhere close to that,” added Jeffers. The surcharge, which will cost most customers $54.00, is expected to generate about $20,000 a month.

In comparison to other nearby utility districts, the Oneida water rate had been the lowest. Presently, the Oneida base rate is $8.65, meaning, with the surcharge, the rate will increase to $13.15. In contrast, Huntsville Utility District customers currently pay a base rate of $14.03. After the increase, only customers of Jamestown Utility District will enjoy a lower rate, $8.74; however, that district, stated Jeffers, is also in financial straits. Other nearby utility rates include: Lake City, $14.40; Kingston, $14.57; Caryville/Jacksboro, $15.13; Norris, $15.94; Harriman, $17.64; Sunbright, $20.50; and Plateau Utility (Morgan County), $21.00.

Of the council men, Anderson was the lone objector to the rate hike, calling for cost reductions before imposing a rate increase on customers. Last year, the City Council apparently asked the water district to look at making cutbacks, a request that Anderson claimed went unheeded. “You, your department and the (water) board haven’t done anything,” asserted Anderson. In his exchange with Acres, Anderson went as far as to imply Acres’ “poor management” had led to the district’s problems. Anderson also questioned trips taken by members of the water board; trips that Acres defended. “(Per state law), all board members must be certified,” commented Acres. By attending those meetings, board members received training necessary to serve, he implied.

Anderson also suggested staffing cutbacks, a cost cutting measure opposed by Alderman David Lowe. According to Acres, the water department was already two employees short; one office worker and one plant worker.

“(We’ve been) sensitive to the (economic) situation, but we must be good stewards of the district’s money” commented Water Board Chairman Terry Roark. With insurmountable losses sustained from industry reductions and closures, Roark added, “(The district revenues) were spiraling downward.” In the wake of those losses, the district also faced the likelihood of state intervention. “We don’t want the state to set a rate which would be much higher than this,” he concluded. Mayor Lay concurred with Roark’s assessment, adding, “We have a responsibility to our people. While we could let the State handle it (the rate increase); I don’t think that is good leadership.”

Despite Thursday’s action, the Town will still likely receive notice from the State; however, the district is relatively sure the State will accept its self-imposed rate increase. The rate hike will appear on customers’ bills in February.