Oneida City Council/Water Board Discuss Reasons For Water Rate Hike

Oneida, TN (2012-01-24) Oneida Mayor Jack E. Lay, Oneida Water and Wastewater Manager Johnny Acres, and members of the Oneida City Council and the Oneida Water Board, met from more than an hour Tuesday afternoon to discuss the circumstances that led to a state-mandated rate hike on water and sewer rates in for customers of the Oneida Water and Wastewater Department.

At the onset of the meeting, Acres told attendees most of his comments would be directed toward Alderman Cecil Anderson, who had called for the dissolution of the Oneida Water Board and Acres’ job at the last meeting of the Oneida City Council. “For the last three and years, I’ve received nothing but rocks from Cecil,” commented Acres. Earlier in the month, Anderson had questioned the necessity of a water rate increase, expressing his belief that wasteful spending practices and flagrant mismanagement of the department had placed it into a financial quandary.

At the forefront of the spending controversy was the apparent purchase of nine new trucks for the department, an expenditure of $439,000. The trucks, stated Acres, were procured with excess grant funds made available by the Rural Development arm of the U.S. Department of Agriculture. “If the (Water) Board hadn’t voted (to buy them), Rural Development would have taken the money back,” explained Acres. In addition to the trucks, the department also purchased several other pieces of equipment with grant funds, including a new trenching machine. The roof of the wastewater treatment plant was also replaced.

At the Council’s last meeting, Anderson also brought to light a recent fine imposed on the Town by the Tennessee Department of Environment and Conservation for raising the height of the spillway riser at the Howard H. Baker reservoir without permission. Nearly ten years ago, the Oneida Water Department allegedly raised the height of the riser on the spillway, creating a greater impoundment area. At that time, the Town, given drought conditions and demand, was experiencing supply problems. To alleviate the issue, the Town of Oneida began purchasing treated water from the Huntsville Utility District, a measure that cost the department about $165,000. By increasing the volume of its containment area, the water department reduced its need for purchasing water from Huntsville. However, in doing so, the water encroached upon the landowners surrounding the lake. “(You) took people’s land,” commented Anderson. Acres claimed most of the deeds for property surrounding the lake allowed for the utility district to take up to fifteen feet above the high water mark (for additional storage).

Last month, the Tennessee Department of Environment and Conservation levied a $7,500 fine against the Town for failing to remove the obstruction on the riser. The water department had reportedly been notified in March 2008 of the violation and ordered to remove it.

At the center of Tuesday’s conversation was the recent implementation of a 40% across the board increase on water and wastewater rates for customers of the Oneida Water Department. “We couldn’t survive on what we were receiving,” noted Acres. Anderson charged lack of management and board control. “Something is wrong with the water department,” Anderson asserted. He further claimed Oneida rates were now higher than those charged by Huntsville Utility District.

When fuel costs spiked, the Oneida Water Board, which couldn’t increase rates without city council approval, imposed a $3.50 surcharge to offset the increase. In December 2008, Anderson pressed for its removal. The charge was taken off customer’s bills in January 2009. “If the $3.50 (surcharge) hadn’t been removed, we wouldn’t have had to go to the state this year,” stated Acres. With the additional revenue, Acres felt the department would have shown a profit for the year; however, he cautioned, without further action, the department may still have had to increase rates in 2012. Last January, the Water Board tacked on a $4.50 surcharge to offset its debt. A month later, it had to borrow $300,000 to meet it short-term debt obligations. Given the recent rate increase, the $4.50 surcharge was removed last month.

In the past, the water department depended on revenue from large industrial users to offset its expenses; however, with the economic downturn and loss of industry, the department’s revenues dwindled. At the same time, local residents began feeling the brunt of the employment situation. Instead of imposing periodic increases, the water board waited. “We erred on the side of the people that didn’t need to be paying more (at the time),” commented Terry Roark, a member of the water board.

The Oneida Water Department is currently $3 million in debt. According to city auditor Dennis Jeffers, the fixed assets of the department are worth $26 million. “The two of us together (the Town and Water Department), we’re a pretty good outfit…together, we can survive,” Acres commented.