Loudon Utilities Board discussed Monday a pending water supply contract with Tellico Village Property Owners Association.

Ty Ross, LUB manager, said after many back-and-forth meetings, TVPOA has requested a premium water supply service as opposed to the standard water supply service in Loudon. Contract negotiations are now centered on price points and penalties.

There are two “sticking points” for TVPOA, Kris Frye, Loudon city attorney, said.

“Basically it’s what is the penalty if we don’t complete these improvements and upgrades to the system by July 1, 2022,” Frye said. “Now we’ve worked with our engineers and our staff, and we feel very comfortable that we can complete these upgrades by this date. So this penalty would never go into effect, but just to protect us, we’re currently negotiating over what, if any, adjustment in the rate there would be if we are unable to deliver on the improvements that are identified.”

Improvements include master meters to deliver 1,095 hydraulic grade line, which Ross said will provide high quality water pressure to Village residents situated on higher elevations.

If LUB fails to deliver the improvements by July 1, 2022, there would be a break on the rate.

“We’re saying upfront we can’t deliver 1,095 (hgl) all day, every day as the system is currently running. We can the vast majority of the time,” Frye said.

The negotiations are now focused on accountability, Ross said.

“What we’re separated on now is they want accountability built into this agreement, and we’re fine with accountability, but a penalty should not be draconian as such where they get off likely and not have to pay for any service,” he said. “Standard service is standard service is standard service, and we have no problem delivering that. What we want to tie the penalty to is this premium service, this premium add-on that we’re negotiating through these additional structural improvements.”

The penalty would be on a monthly basis, Frye said. Based on the current situation without improvements, LUB is safe 10 of 12 months of the year.

Board member Gene Farmer questioned if that was good enough.

Frye said once improvements are in place, there would be no issues.

“That’s yet to be seen, of course,” Farmer said. “That’s a hypothetical number. So once again, are we negotiating on something we’re not even sure if we’d meet it or not? And if we don’t we’ll be back to the base rate.”

Farmer wants engineers to be as sure as possible about the effectiveness of improvements before moving forward with the contract.

“Even with 20 years of projected growth, I would feel good if you can get 95 percent confidence level,” Farmer said. “That’s what I’m saying, we should not enter into any statement of agreement if we don’t have at least a 95% confidence level.”