Smithville Poised to Again Raise DUD Water Rate

The City of Smithville is again poised to raise the water rate it assesses the DeKalb Utility District.
With only a few months remaining before the DUD opens its new water treatment plant, the city plans to charge the DUD $3.00 per thousand gallons for the water it buys from the municipality starting July 1. That is up from the $2.67 per thousand gallons the city currently charges. Once DUD breaks ties, the city will lose its largest water customer and hundreds of thousands of dollars in revenue. In the budget, the city has reduced projected revenues from the sale of water to the DUD from $765,000 for the year ending June 30, 2016 down to $400,000 for half the year in 2016-17. City officials say such a loss of income may eventually force the city to look at ways of cutting spending or raising new revenues to make up the difference.
The new rate to the DUD is included in the 2016-17 budget ordinance adopted on first reading by the aldermen Monday night. The vote was 3 to 0. Two aldermen were absent.
But does the new rate violate a court order?
In February, 2014 Chancellor Ronald Thurman ordered the City to reduce its water rate to the DUD from $5.00 down to $2.67 per thousand gallons, which a water study found in 2013 was the city’s actual cost to produce water at the time.
Following a two hour hearing in Cookeville, Chancellor Thurman granted a DUD motion for a temporary injunction barring the city from continuing to impose its $5.00 rate until the city gave proper notice to DUD and justification for raising the rate above $2.67 per thousand gallons.
During that hearing, the Court found that the city violated Section 18-502 of the Smithville City Code, which required the City of Smithville to give the DeKalb Utility District 30 days’ notice in advance of a rate change. The City of Smithville gave the DUD only 16 days’ actual notice in advance of the rate change. The Chancellor also found that the city had not given proper justification for arriving at the $5.00 rate.
In an effort to remedy the notification issue in the future, the aldermen voted in March 2014 to abolish the 1980 ordinance, which set the rate to the DUD at that time and also provided that a 30 day notice would be given the DUD if the city were to modify the rate.
City officials say the proposed rate hike now is based on the utility engineers recommendation. But the new $3.00 per thousand gallon rate would not take effect until July 1 and is subject to passage of the budget ordinance on second and final reading at a special meeting of the mayor and aldermen on June 28.