Catoosa Utility District board members admittedly bungled their first rate hike in 10 years but they say the need for more money means an increase is unavoidable.
"I apologized to the consumers for the way we handled this," Chairman Jerry Lee said. "But we need the money. We don't have a choice, we've got to have extra money."
Earlier this month, customers revolted after a change in the rate structure was mailed out with no explanation or warning. Board members reversed the change and credited everyone's bill.
"We've got probably 80-plus years of business experience among us all, but we didn't have experience with (public relations)," board member Alvin Worley said. "We didn't back down because we were scared. We rescinded it because we didn't get the message out. We needed to communicate better."
Chairman Jerry Lee said board members realized they needed to increase rates earlier this year while discussing whether to build a filtration plant or install a 24-inch water line from the Georgia-Tennessee state line.
The utility distributes water from Yates Spring, which produces 5 million gallons a day. The water is so clean that the only treatment it needs is added chlorine and fluoride. During periods of heavy rains or dry months, the utility buys water from Tennessee water companies to augment the supply.
A filtration plant would protect against possible contamination at Yates Spring. A 24-inch pipe would supply water from Tennessee companies if the spring were to go dry.
"When we talked (to a bonding company) about getting a loan, the first thing they said to us was, 'You will have to go up at least 20 percent on your rates,'" Mr. Lee said. "The same thing with a filtration plant. If we needed one tomorrow, we'd have to go through the same process: Apply for bonds, get an engineer to design it, then two years to build it."
The board passed $1 per meter fee in 2006 to raise money for a filtration plant. That fund is up to about $900,000, officials said..
Other expenses have strained the utility's $5 million annual budget, board members said.
Last summer, the district paid $600,000 for Tennessee water companies and will likely do the same this year.
Meanwhile, the cost of water supply lines and other materials has increased.
In the past, those expenses were covered by income generated by a growing customer base. But when the new housing market dried up, so did the income.
Board members have reduced costs by not replacing three employees and freezing raises, Mr. Lee said.
Customer Amanda Spencer this week asked board members to reduce their salaries and give up utility-paid health insurance for which they pay $10 a month.
"I'm not mad about the rates; everything goes up," Mrs. Spencer said. "But it is going to hit seniors on fixed income the hardest. The board is no better than senior citizens who pay $90 a month for Medicare."
The board is continuing to work on how to meet its budget shortages, members said.
"We are working on the best way to decide how much we need and how to go about doing it," Mr. Lee said. "But our goal is to make sure our customers will have clean and ample water now and in the future."