Also, another 1 percent hike would be tacked on to water customers as a pass-through increase by the Hiwassee Utilities Commission, according to budget proposals presented Thursday during the board’s formal monthly session.
HUC is an independent water supplier servicing Cleveland Utilities.
Although CU budget planners are suggesting the water and wastewater rate hike, the proposal does not include any internal increases for electrical use. This excludes any pass-through increases from the Tennessee Valley Authority which sells electrical power to Cleveland Utilities.
Traditionally, CU passes along TVA rate increases to its customers, a common practice among public utility companies in the region.
CU General Manager Tom Wheeler acknowledged in a board briefing that the local utility could have wrestled with a budget proposal that includes little or no rate increases; however, the rate of growth that Cleveland and Bradley County have experienced in past years, and continues to realize, is creating the need for expanded and improved infrastructure — which is expensive.
The availability of existing infrastructure is what attracted new industries like GE’s Eastern Lighting Distribution Center, Wacker Chemie AG and Amazon.com, Wheeler explained. Continued growth will require a continually expanding infrastructure and this includes full and immediate access to electric, water and wastewater services.
“We have some pretty aggressive building plans,” Wheeler told the board.
One such plan was presented last month. It is a 6-year, $9 million water transmission line project stretching from Charleston to APD 40 near the Coca-Cola bottling plant.
“It will take a long time to design and to build but it’s the kind of thing that you need to start now,” Wheeler said. This project will be completed in two phases.
The CU administrator credited the board for past decisions to support infrastructure projects that have been integral in the community’s recent growth.
“This board has stayed ahead of the curve to make sure the infrastructure is there that is required,” Wheeler said.
Wheeler told board members the utility’s readiness to serve industrial customers, now and in the future, plays a significant role in recruiting economic development opportunities to the Cleveland and Bradley County community.
“I will be the first to say that without the infrastructure in place those (developments like East Coast Lighting, Wacker Chemie and Amazon) would have never happened,” he stated. “That’s why it is so important that we stay ahead of the curve.”
Wheeler added, “We continue to stay ahead of the curve because if we’re going to build on what we already have ... these water lines, these transmission lines ... then these improvements are going to have to be in place ahead of the fact. They’re going to have to be sitting there waiting on the development to occur. If they’re not there, then these (developments) we have just experienced will not have happened. I assure you of that.”
Wheeler called water and sewer lines “engines of development” because they are key selling points in industrial and new business recruitment.
“We just didn’t think this was a year to come to you with a budget that is backing away from these commitments and promises that we’ve made in the past,” he added. “We need to keep going and be ready for what we really expect to happen.”
In a nutshell, what is expected to happen in the Bradley County community in the immediate and foreseeable future is continued growth as documented in the BCC 2035 Strategic Growth Plan.
In spite of the proposed rate increases, CU remains among the lowest-priced utilities among those surveyed in the East Tennessee region and other public utilities of comparable size, Wheeler said. He presented the figures to board members.
For example, among households using about 6,000 gallons of water (a household of two people) each month, the CU rate is second lowest at $21.51. The only one lower among those surveyed is Maryville at $19.84. Right behind the CU water rate is Bristol at $21.63. The highest water rate among the 14 surveyed is the Hallsdale Utility District at $51.80.
In wastewater, among 6,000-gallon-per-month users, CU’s rate of $31.76 is seventh, or in the middle of the pack. The lowest of those surveyed is Sweetwater at $23.36. The highest is Knoxville Utilities Board at $63.68.
In combined rates for water and wastewater, CU’s rate stands at $53.27 which is fifth lowest behind Sweetwater, Maryville, Bristol and Johnson City. Sweetwater’s lowest rate is $46.72. The highest combined rate is Hallsdale Powell Utility District at $108.21.
Wheeler presented rate comparisons for other household sizes as well, including 12,000 gallons per month (four-member households), 60,000 gallons, 600,000 gallons and 6 million gallons. In all categories, CU’s water, wastewater and combined rates were among the lowest to mid-pack. CU was never among the higher rates.
Ken Webb, manager of CU’s Accounting Division, pointed out the local utility plots budget proposals nine years in advance in order to stay abreast of coming fiscal needs. He said the 5 percent rate hike proposals for FY 2012 were anticipated in last year’s budget document.
The budget proposal for next year anticipates selling 1,083,141,000 kilowatt-hours in the Electric Division, 2,815,700,000 gallons of water in the Water Division and 1,801,200,000 gallons of water in the Wastewater Division.
Projected revenue includes $96,163,673 in electric, $12,838,274 in water and $10,151,550 in wastewater for a total of $119,153,497. Projected expenses include $95,905,523 in electric, $12,687,569 in water and $9,419,802 in wastewater for a total of $118,012,894.
Projected net income for the year includes $258,150 in electric, $150,705 in water and $731,748 in wastewater.
The budget proposal includes plant investments of $9,040,000 in electric, $5,884,000 in water and $4,228,100 in wastewater.
Under debt, the budget proposal points out the Electric Division will begin the year with $14,640,000 in debt of which $930,000 will be paid over the course of the year to reduce the total to $13,710,000 by year’s end. Debt in the Water Division will begin at $21,512,821 and another $3 million will be added with $1,086,923 paid on existing debt and this will bring the year-end debt in water to $23,425,898. Debt in the Wastewater Division will begin at $27,348,863 and $1,841,495 will be paid on existing debt, leaving the year-end debt in wastewater at $25,507,368.
The proposed budget includes 1.5 percent cost-of-living pay increases for all CU employees in each division and 2.5 percent in merit increases for those employees who are eligible.
Last year’s CU budget included 1 percent cost-of-living pay increases but no merit increases. The budget two years ago included no pay hikes.
The FY 2012 budget proposal includes 192 employees.