Limestone 'optimistic' about DU water deal
By Evan Belanger
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As Decatur councilmen appear to be having second thoughts over a proposed agreement between the Limestone Water and Sewer Authority and Decatur Utilities, it's anyone's guess how Limestone officials will respond.
DU board members are already refusing to participate in further negotiations as requested by the City Council, but Limestone officials have said little.
"I am optimistic that we can address any concerns that the council might have," Limestone authority Manager Tony Sneed said in a prepared statement.
Sneed declined to respond to any specific questions, and calls to other Limestone authority officials were not returned.
Approval of the agreement, which would allow DU to sell up to 10 million gallons a day to the Limestone authority, seemed a forgone conclusion less than two weeks ago.
But since then, some councilmen — claiming the Limestone authority will profit heavily by selling Decatur water to other systems — have delayed consideration. They are now requesting the Limestone authority pay more than the standard rate.
"I have a real strong feeling that they are going to take this water and sell it to Madison," said District 2 Councilman David Bolding. "So, I think there should be some sort of stipulation as to whether we're going to profit from this deal or they're going to profit from it."
If Limestone officials agree to negotiate a new price, how much they'll be willing to pay is unclear — especially because Madison Water Department Manager Ricky Pounders says he has no intention of buying additional water from Limestone in the future.
Sales to Madison
Currently, the Limestone authority sells Madison up to 2 million gallons a day, but, Pounders said, Madison will likely build its own treatment plant within five or 10 years, eliminating the need for Limestone water.
Just the same, it's no secret that both DU and the Limestone authority sell water to a number of other water systems. In August, the Limestone authority pumped 239 million gallons to other systems at a 15-percent markup.
If Limestone authority officials elect to walk away from the deal, they would have a few alternatives open to them. But All look to be more expensive than the original deal with DU.
Perhaps the most likely choice, they could look to Athens Utilities for water. Limestone already has an agreement to purchase water from Athens.
On average, Limestone gets 3- 3.5 million gallons a day from Athens, but Athens Utilities Manager John Stockton said his water plant does not have the capacity to sell as much as DU.
"If they need 10 million gallons a day, the bottom line is we don't have it," Stockton said. "We would have to expand our plant, and we would expect them to pay for that."
Stockton estimated it would take $16 million to $17 million to expand the Athens plant.
That compares to an estimated $10 million for building a 30-inch-diameter pipeline across the Tennessee River to connect to DU's output.
DU already sells Limestone up to 2 million gallons a day, but the pipe work involved in that agreement are not large enough to support the new proposal.
Other options for the Limestone authority include building its own treatment plant.
Sneed said previously the Limestone authority board owns enough land on the Elk River to do just that. In addition, the board has taken a loan large enough to fund its construction, which Sneed estimated would cost about $40 million.
Perhaps a last resort, officials could elect to wait for the Madison Water Department to build its new treatment plant on the Tennessee River and purchase water from them.
Other changes proposed by the Decatur City Council include one that would include an escape clause in the 30-year agreement should it become detrimental to Decatur.
Another calls for a clause that would prevent the Limestone authority from selling the agreement to another entity.
If the water proposal falls through, it could spell trouble for DU ratepayers. A decline in the demand for DU water since 2000 has spread DU's fixed treatment costs over fewer gallons sold.
If the trend continues, it would increase the likelihood of DU rate increases.
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