Though Tennessee-American Water Co. is proposing to raise its rates by 20 percent, the jurisdictions that buy water from the utility won’t have to raise rates until their contracts expire, officials said.
Walden’s Ridge Utility District and Signal Mountain buy water from Tennessee-American and resell it to their local customers, according to Tennessee-American President John Watson.
The other utilities in the county get water elsewhere.
There are seven other water utilities in the county. The county’s 10 water utilities serve about 137,000 customers, according to a report by County Auditor Bill McGriff’s office.
Extra water costs from Tennessee American’s rate increase, if approved by the Tennessee Regulatory Authority, could affect those water utilities once the contracts expire, Mr. Watson said.
Signal Mountain residents won’t see an increase until next year, said Vice Mayor Herschel Dick, who previously oversaw the town’s water system. The town’s contract with the Tennessee-American began in July 2006 and lasts until July 2009, he said.
“We don’t know what 2009 is going to bring us,” he said.
The audit report shows that Signal Mountain’s water is generally cheaper than the water Tennessee-American provides to its own residential customers.
For a residential customer buying 5,000 gallons of water from the Signal Mountain district, it costs $19.47 a month as of mid-2007, the auditor’s report shows. For a Tennessee-American customer, it was $20.42 a month at the end of 2006.
The reduced cost comes from the fact that Signal Mountain foots the bill to pump its water to customers, Mr. Dick said. Signal Mountain also gets a reduced rate from Tennessee-American based on the volume of water it buys, he said.
At the end of 2006, for residential customers who use 5,000 gallons, Tennessee-American had the sixth most-expensive water out of the 10 water utilities in the county, according to the auditor’s report. But with the company’s 12 percent increase in May of last year and its proposed 20 percent increase, it would become the fourth most expensive.
For commercial customers, the company is about second most expensive, according to the auditor’s report, and would stay in that spot after the increase.
Mr. Watson has argued that the rate increase is necessary to maintain and improve Tennessee-American equipment such as pipes, meters and water-storage facilities.
It is “very difficult to compare rates of service” among water utilities, he said, because some utilities have tap fees — charges for turning on water service — and other charges not included in the rate itself. He also noted that geography and the location of the water source can greatly affect the cost of providing water.
Gene Hoffine, general manager of the Hixson Utility District, the cheapest water system in the county for residential customers, agreed.
“We have an excellent water source,” Mr. Hoffine said, which keeps rates cheaper for its customers.
In Hixson, 5,000 gallons per month would cost $9.78, according to the auditor’s report.
Hixson’s water comes from at “true groundwater source,” he said, which means it does not have to be treated before it goes to the tap. Chlorine to kill bacteria and an additive to keep out phosphates are all that go in, he said.
Size matters, too, Mr. Huffine said. Hixson Utility District is the second-largest water provider in the county, serving about 24,500 customers.
Conversely, Sale Creek Utility District, Hamilton County’s most-expensive and smallest water provider for residential customers, serves just more than 700 customers, said Jim Reavley, chairman of the board for the utility. A monthly bill for 5,000 gallons in Sale Creek is $40.87, according to the auditor’s report.
While small, Sale Creek has “the same expense as the larger companies,” he said, which contributes to higher rates. Part of that debt comes from the widening several years ago of Dayton Pike, Mr. Reavley said.
“We had to move over 50 percent of our 10-inch mains,” he said. “We’re still paying on that.”