The Tullahoma Utilities Authority (TUA) Board of Directors approved revising the rates of both water and wastewater.

The rate changes came before the board at its April 24 meeting. For the water rates, it was noted that TUA had maintained stable water rates for an extended period, with no increases from 2006 through 2019, and had only modest adjustments in 2019, 2022 and 2023. As for the wastewater rates, there were no increases from 2012 through 2022, with only recent adjustments beginning in 2022.

However, over time, the cost of operating and maintaining both the water and wastewater systems had increased, and while the previous adjustments helped, it was not able to fully keep up with the pace of the costs.

“We did everything we could to not propose a rate increase this year,” TUA President Potter said. “We looked at a lot of numbers.”

Potter continued and said that a 20% increase did sound high, but when looking at TUA’s current ratings for water and wastewater per month, the increase was $4 and $7, respectively.

“I still understand that impacts people’s bills,” Potter said. “It’s a 20% rate increase, but I don’t think it does justice for what we’re asking for.”

Potter pointed out that when they compare the payroll of FY26 to FY27, they will see there will be a decrease of about $600,000.

“ The reason I say that is because I don’t want anyone to think that this rate increase is in any way tied with payroll here because we’re decreasing our payroll next year,” Potter said. “ This is tied with projects we have to do to maintain water and wastewater systems.”

Some of the upcoming projects include installing a new water storage tank and maintaining inflow and infiltration ( I& I) to treat rainwater.

“Those are multi -million-dollar projects on the horizon,” Potter said. “I just want to be clear, these are not tied to payroll. These are about capital projects that we’re doing.”

Potter then praised the past management for keeping the water rates low and said they intend to do the same, but added that sometimes, with inflation and the cost of projects, they will need to make changes.

Board member Dr. Jimmy Blanks said when comparing to other utilities around the area, TUA would probably fall in the middle for rates if they approved the change. Potter then clarified that TUA does not set rates based on other utilities. TUA’s rates are based on what it takes to operate and maintain the system correctly.

“We do not base our rates on what other municipalities are doing,” Potter clarified. “It’s a good way to see if we’re out of line, but we, in no way, use that as a marker of where we should be.”

Going back to capital projects, board member Patty Deen mentioned that Winter Storm Fern was a real wake-up call for TUA to get another water storage tank.

“The state was already after us to increase our water storage, and that water tank is not going to be cheap,” Deen said.

She added another project for the water tanks is to identify any leaks, which will also be expensive but necessary to do.

“It’s going to be a long, involved, costly process to make sure that we’re good stewards of the water that we have,” Deen said. “There’s a lot that’s going to be in that budget that needs to be compensated.”

Going back to the I&I, Potter shared that engineering consultants have advised that TUA spend $20 million over five years to fix certain spots.

“I don’t think we can afford that, but we have to start working at some point to resolve these issues,” Potter said.

Board member Busch Thoma, who serves as the city liaison for the Board of Mayor and Aldermen, recalled going to CFO Jason Penny about how water and wastewater weren’t breaking even financially, and said the rate increase was a solution to help TUA break even. Board member Daryl Welch asked Potter, if passed, the rate increase would be significant enough to last for a while, and Potter said that while he can’t predict the future, he believed that the rate would stay for several years.

“We went 13 years without one,” Potter said.

Board Chairman Mike Stanton added that the board is doing its due diligence, as they have learned that a water shortage is a real possibility, as well as addressing leaking issues.

“It might be reevaluated in three years from now, but at least we’re getting started on doing something about it,” Stanton said.

The board would unanimously approve the water rate increase.

Moving on to the wastewater increase, though much was discussed previously, Potter added that the increase would eliminate TUA’s dependence on the Bonnaroo Music and Arts Festival, reflecting on seeing the news of Bonnaroo’s cancellation last year.

“The first thing I thought was ‘Oh no, our budgets gonna be hurting,’ because we make a significant amount on Bonnaroo’s wastewater,” Potter said. “With this rate increase, we’re no longer dependent to make our budget balance based on Bonnaroo, which is very important for our rate payers in our system because (Bonnaroo) can cancel that, like we saw last year, on the spot.”

Potter emphasized to the board that he and his staff take the proposed rate increases seriously, as they spent time looking at the budget and made cuts to avoid rate increases. He noted that rates for electric and fiber will stay the same, noting that each department operates differently from the others.

“One does not subsidize the other,” Potter stated. “They operate completely independently, so we look at the budgets completely separate and do what we have to do for each budget.”

With no further discussion, the board unanimously approved the rate increase in wastewater.