Crossville officials reconsidering a 25 percent wholesale water rate increase after learning that a recent vote to raise city rates automatically triggered the hike for neighboring utility districts.
Cumberland Plateau Water Authority General Manager Jeff Dyer said the increase was discovered after he contacted city staff to determine how the budget process affected wholesale pricing. Dyer said the city previously confirmed it was already covering its costs at the prior rate of $4.75 per thousand gallons before the automatic adjustment moved the price to $5.71.
“With no real time to plan from a utility, you can imagine the struggles of just finding out, ‘Hey, you’re getting hit 25 percent, you better figure out how to deal with that with your customers,” Dyer said. “So for utilities that may be struggling or are tough to operate, it could be crippling to those utilities.”
Dyer said the current rate is significantly higher than the industry average and exceeds the prices established in other regional water contracts. Rick Bilbrey, representing Grandview, said the sudden financial burden would be detrimental to the utility.
“It’s going to devastate us,” Bilbrey said.
Mayor pro-tem Art Gernt said the council was focused on equalizing rates for city residents and those living just outside the city limits during previous discussions. Gernt said the impact on wholesale customers was not the primary focus of the rate restructuring.
“And honestly the wholesaler thing, I’m sure it was discussed, I just I missed it or it didn’t hit me,” the Gernt said. “We were paying attention to how we you know trying to trying to equalize our rates that we have you know with the folks who are in the city.”
The automatic increase is tied to a 20-year-old contract that links wholesale price adjustments to changes in the inside city rate. The council agreed the matter should be placed under other business for the next meeting to allow for further discussion and a potential motion.
“I would be interested to see the specific contract language if I get a chance to review that as to how the inside city rate change affects the automatic adjustment of wholesale rates,” Councilman Mark Fox said. “I am unfamiliar with that exact language at this time”
Dyer said the 25 percent increase is a one-time shock that differs from the normal practice of minor price movements.
The council will further discuss the wholesale water rates during its next meeting.
In other business the council considered the de-annexation of a property on Hyder Ridge Road.
