City Hoping to Strike Last Minute Deal with DUD Before UMRB Hearing Thursday

April 1, 2013
Dwayne Page

With a rate review hearing set for Thursday by the state's Utility Management Review Board stemming from the DeKalb Utility District's plan to build its own water treatment plant, the City of Smithville is offering the DUD a last minute deal on a new ten year water purchase agreement.


During Monday night's regular meeting of the mayor and aldermen, city attorney Vester Parsley, Jr. said that the municipality's engineer, J.R. Wauford is recommending that the city offer to sell the DUD water at the rate of $2.20 per thousand gallons for the first five years of a new contract and that the rate increase to $2.40 per thousand for the last five years of the agreement. The DUD currently pays $2.05 per thousand gallons. The proposal would take effect at the end of the city's current contract with the DUD which expires in early 2014. "We had Mr. Wauford to do a feasibility study for us to make an offer to the DUD regarding a possible solution to this problem by offering to them a contract which would say for the first five years that we could sell water to them at a rate of $2.20. And after that for an additional five years at the rate of $2.40," said Parsley

While that is below the city's actual cost of $2.67 per thousand gallons in producing water, according to a recent study by Warren and Associates Engineering PLLC of Lebanon, Parsley said it is better for the city to have an agreement with DUD than to risk losing it's largest water customer. "I realize that's a little below what the cost study of Mr. Warren said. However, one of the factors you have to consider is if we lose DUD, we lose roughly $300,000 plus," said Parsley. "But we can sell it to them wholesale a little cheaper because of the volume that they have. Mr. Wauford felt like it was better to reduce our rates to them for the next ten years to keep them as a customer rather than lose them as a customer and have to lose probably in excess of $300,000 annually," he said.

Parsley said while no immediate action was required by the mayor and aldermen, both the city council and the DUD board of directors would have to approve this proposal. Parsley said he plans to submit the offer to DUD Attorney Keith Blair as early as Tuesday morning. "We will submit that to them tomorrow. Don't know that we'll have any answer right away," said Parsley.

If the DUD should reject or take no action on the city's proposal before Thursday, the UMRB rate review hearing will proceed as scheduled. Parsley said with so many witnesses and lawyers for both sides involved, it could last all day Thursday and possibly go into Friday. "It is possible that the hearing may go into Friday. Its expected that if we finish on Thursday it will certainly be late into the evening," said Parsley.

The meeting will be open to the public but no one will be permitted to address the UMRB. The hearing will be conducted much like a judicial proceeding as lawyers for the DUD ratepayers, the city, and the DUD call witnesses to testify. An administrative law judge will oversee the proceeding and once all the issues are presented the seven member UMRB will render a decision in the case. "The procedure would be that the board would actually make a decision then and there," said Parsley. "It will be open. They will openly discuss the ramifications of building a new plant in front of the public. The public as a whole will not be allowed to speak. The reason for that is because the administrative law judge did not want it to get into just a gripe session. We're going to be pressed for time as it is. There's about six lawyers involved and there will be several witnesses. We expect to be in testimony for six to eight hours or longer," said Parsley.

The UMRB will actually begin Thursday morning with other business at 8:00 a.m. followed at 9:00 a.m by the DUD hearing. It will take place at the county complex on South Congress Boulevard.

Opponents say that water rates for DUD and Smithville subscribers will increase if a DUD water treatment plant is built and that it is unnecessary since the city has the capacity with its water plant to sell the DUD as much water as it desires.

At a DUD board meeting last May, Chairman Roger Turney said the county would be better served by having another water plant. "One of the reasons is to be able to control our own destiny. To determine where we can go and where we can't go," said Turney. "Over the last several years, several things have happened worldwide that has made it imperative that whenever possible, it makes good sense for areas to have backup water supply systems. If you say, well nothing has happened in years, look what happened in Nashville just a few years ago. They were flooded by a one hundred year flood. They came so close. If there had not been interconnections between other utility districts around them, Tennessee would have had a disaster unmanageable. We think its beneficial for the whole county, Smithville, our customers, and everyone to have a second treatment plant in a day and world we live in today because who knows what could happen. Something might happen to both of us. Its entirely possible," he said.

We know that most industries like to have backups because if something happens to the water treatment plant that supplies them water, if they shut down, they lose. They love to have a backup. That would be a benefit," said Turney

According to Turney, other cities would like to have access to Center Hill Lake for their water supply and if the DUD doesn't take advantage of this opportunity, some other utility may. "Center Hill Lake, I think, is the best water supply in the State of Tennessee. The Corps of Engineers, over the years, is getting more and more restrictive because a lot of people are drawing out of that lake. Cookeville and other areas want more and more water all the time. We looked that over and decided if we don't get in line and get our piece of the pie in reserve, it may be gone. If we don't do this now, ten years from now we may say we want to build a plant, and the Corps of Engineers could say I'm sorry there's no water allocated for you and you can't do it. That could well happen," said Turney.

Smithville is represented in the case by city attorney Vester Parsley along with former Nashville Mayor Bill Purcell and Nashville Metro Councilman Jason Holleman who are law partners. Purcell and Holleman are also representing the ratepayers who are opposed to a DUD water plant. The DeKalb Utility District is represented by DUD attorney Keith Blair and Nashville attorney Dewey Branstetter.

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