published Sunday, March 13th, 2011

Water rates may rise 28% this week

Water is processed at the Tennessee American Water Co. facility off Riverside Drive. 
Staff File Photo by Angela Lewis
Water is processed at the Tennessee American Water Co. facility off Riverside Drive. Staff File Photo by Angela Lewis

The Tennessee American Water Co. is poised to push through a 28 percent residential rate increase — the largest in Chattanooga history — as soon as this week, according to statements the company made to regulators.

An increase of that magnitude would cost the average residential customer more than $50 per year. Industrial or other big water users could end up paying thousands of dollars more. 

Tennessee American could raise rates on or after Thursday, company attorney Dale Grimes told the Tennessee Regulatory Authority last week, even though the state board will not have ruled on the utility’s rate request.

This would be the first time that Tennessee American has raised rates without prior state approval. Officials said in hearings that the company is acting because the rate case has dragged on for six months and resulted in repeated requests for new information.

WATER COSTS

• The average residential customer uses 4,405 gallons of water and pays $16.62 per month.

• Tennessee American Water wants to raise the average rate by 28 percent, or about $4.68.

• The increase will amount to about 15 cents per day.

Source: Tennessee American Water

Meanwhile, water company officials say, the system needs money for maintenance and capital projects.

State law allows Tennessee American to raise rates if regulators take longer than six months to rule on a request, officials said. But the utility could be forced to give back some of the money if the TRA later approves a lesser increase than the company is seeking.

“It’s discouraging that they’re taking these steps ahead of the TRA, that they’ve ignored the voices of those people who are struggling to survive,” community activist Joe Rowe said Friday.

The impact

Under the new rate, the University of Tennessee at Chattanooga could owe an additional $115,000 more per year, on top of tens of thousands of dollars in stormwater fees, said Dr. Richard Brown, vice chancellor for finance and operations.

“My primary concern is keeping the cost of education affordable,” Brown said. “If the state doesn’t appropriate funds for it, you have to pass it along to students who are attending institutions.”

At the Community Kitchen, assistant director Jens Christensen said the increase would raise the charity’s water bill by $8,540 to $36,540 a year.

“Something like that, we have to ask the people who support us already to assist us in making up that difference,” Christensen said.

Officials with Tennessee American Water, the state’s biggest private water company, said Friday the company still is weighing its options.

Company President John Watson noted that “state law allows private utilities to place the proposed increase into effect while a case is under review by the Tennessee Regulatory Authority.”

Chattanooga has opposed Tennessee American’s rate proposal.

“The city has been disappointed in the repeated extremely large rate requests that they have made, and the city would be extremely disappointed if they implemented a rate increase prior to the TRA having an opportunity to be heard,” said Rick Hitchcock, an attorney for the city.

The company view

Water company officials say the additional money is needed to maintain aging infrastructure and make capital improvements.

The company has taken issue with reports from the water workers union that existing valve infrastructure is in poor condition. But Watson acknowledged that “the company cannot continue to perform valve operation and maintenance in the long term” without the infusion of cash.

Grimes spoke at a supplementary rate hearing to determine how much of the company’s $1.24 million in legal fees from this rate case it may pass on to consumers.

The fees, nearly twice the initial estimate of $645,000, pushed the company’s requested rate increase to more than $11.5 million, according to TRA Director Eddie Roberson.

Roberson wants a hearing to review the utility’s costs for filing and processing its rate request. But Grimes said another TRA hearing, tentatively set for the week of March 28, will delay further what he said is a needed rate increase to keep Tennessee American operating in the black.

Henry Walker, an attorney for the Chattanooga Regional Manufacturers Association, said nothing is set in stone until the TRA rules.

“You won’t know until you get your bill,” Walker said.

The TRA must render its ruling within nine months of the company’s filing, which was Sept. 17, 2010.

about Ellis Smith...

Ellis Smith joined the Chattanooga Times Free Press in January 2010 as a business reporter. His beat includes the flooring industry, Chattem, Unum, Krystal, the automobile market, real estate and technology. Ellis is from Marietta, Ga., and has a bachelor’s degree in mass communication at the University of West Georgia. He previously worked at UTV-13 News, Carrollton, Ga., as a producer; at the The West Georgian, Carrollton, Ga., as editor; and at the Times-Georgian, Carrollton, ...

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Beachbaby said...

This is GREED!! The whole city should stand up against this. 28 percent this year will mean 20 percent more next year . This is no different than what big oil is doing to us at the pump. Let them do it once and it will never end. Shame on Tennessee American Water Company. My 6 year old can manage money better. Why is it legal to pass their legal fees on to the consumers they are robbing ?

March 13, 2011 at 1:26 a.m.
mb_seashell said...

Why didn't the TRA finish on time. Could it be that the City's legal counsel would not get paid all of the $300,000 treasure chest for dragging it out to the last minute. Seems the city is very hypocritical given what it did only a few months ago. Remember the City raised storm water fees and property taxes last year to citizens and business...so how long does the Water Co. have to sit and wait to get this answer for a 4 dollar a month 15 cent a day increase. Where was the TRA when the city increased all of those other fees like storm water that we don't even need.

March 13, 2011 at 4:36 a.m.
NoMyth said...

The reporter should put these rates in context. How do they compare to Knoxville, Nashville, Huntsville, etc?

March 13, 2011 at 12:57 p.m.
BigRidgeGOP said...

Where were all of these critics when the city pushed through a sewer increase as part of the city's budget... all without any notice or public discussion.

Where were all of these critics when the city raised my property taxes and stormwater fees? Where were these critics on the new franchise fee for Chattanooga Gas, which is basically a hidden tax that directs more money to the city coffers. Nothing but silence from those who are protesting this water increase.

The point... the cost of water service is going up just any other utility service we use in Chattanooga. Has anyone looked at the prices for groceries lately? The cost for pretty much everything we use is increasing due to higher gas prices. I see no one screaming in the paper about Bi-Lo and Publix passing down their higher costs.

March 13, 2011 at 11:51 p.m.
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