SUD Concerned about Potentially Costly State Legislation

by Leslie Lytle, Messenger Staff Writer

On the eve of the March 19 meeting, Sewanee Utility District commissioners learned about an amendment to proposed state legislation that would require the utility to bear the infrastructure cost for service to new residential developments. The commissioners discussed the potential for increased cost to customers if the legislation passed and what SUD has learned from past experience. The board also discussed a possible path forward for dripline dispersal of effluent and heard an update on SUD’s American Rescue Plan Act (ARPA) grant.

“This [legislation] may lead to a utility having to pay for all costs for development and for a small utility like us with 1,600 customers in an economically depressed area, that’s not a viable solution for economic success,” said SUD manager Ben Beavers. “We have to break even,” said Commissioner Doug Cameron. “The rates for our customers would go up.” Cameron, Beavers, and Board President Charlie Smith have contacted state legislators. “I asked that they use whatever influence they have to kill this thing now,” Smith said.

The Tennessee Association of Utility Districts brought the pending legislation to the commissioners’ attention. Paraphrasing, Beavers said the amended bill stipulated “a utility could not compel any permittee to improve water and sewer infrastructure without just compensation.” Translated into practice that would mean “any water and sewer put in by a developer would require just compensation back to the developer,” Smith said. “That means the customers would pay for it,” Cameron said.

Cameron brought historical perspective to the possible outcome of the legislation becoming law. “We [SUD] built the stuff for Sewanee-Monteagle Properties [Jackson Point/Jump Off], and there was a financial crisis in the district. It took forever to get it paid off. Our customers had to swallow all that. That’s when we changed the policy.”

To cover the cost of extending water service to the Jump Off area, Beavers explained, SUD decided to sell a certain number of taps before they started the project and to charge a monthly customer fee for each tap whether the tap was installed or not. “Theoretically that was supposed to pay for the debt service for the line,” Beavers said, “but in reality, it didn’t.”

SUD based their new policy on the American Waterworks policy premise “Development pays for development,” Cameron said. Beavers pointed out without that policy SUD customers would have had to pay for the Cooley’s Rift water infrastructure, cost $480,000. If the amended legislation passes, the cost burden of development will again fall to SUD customers.

Revisiting the discussion on switching from spray-field to dripline application of effluent at the Wastewater Treatment Plant, Beavers said SUD currently had adequate capacity, but two proposed projects (University apartments and a St. Andrew’s-Sewanee School development) could push capacity to 80 percent. Cameron noted at 80 percent the state required utilities to pursue expanding capacity. Beavers said a possible way forward would be to install dripline at the spray field out of service due to a lightning strike, as well as at marginal areas too close to SUD’s boundary for spray-field application, with the long term goal of phasing into dripline entirely if there is an advantage. Beavers is seeking engineering advice. The per acre loading rate of effluent dispersal for spray and drip application is the same. Whether the amount SUD could disperse would increase with dripline remains to be determined.

Updating the commissioners on SUD’s ARPA grant, Beavers said all SUD’s contracts had been approved by the state. The mandated Asset Management Plan requires listing, locating, and valuing all assets. “I was surprised at the level of detail they want,” Beavers commented, giving the example of each manhole and each section of pipe between manholes counting as a separate asset. SUD’s engineer estimated gathering data would take seven months. “We’ll learn a lot about the system,” Beavers said, “and we’ll know where everything is.” The deadline for ARPA grant applications is March 31. Beavers speculated more money might be available if not all qualifying utilities applied.

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