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| Audio: Hamilton County Commission -- Aug. 20, 2008 | |
Opponents of the Tennessee-American Water Co. proposal to raise its rates by about 20 percent appeared before the Hamilton County Commission at its Wednesday meeting to make their case.
“Part of what’s missing in this process is transparency,” said Randy Baker, a local developer and volunteer chairman of Fight the Hike, a group challenging the rate increase proposal. “There seems to be a veil of secrecy we just can’t get through.”
John Watson, president of Tennessee-American, disagreed in a written statement.
WHAT’S NEXT
Tennessee Regulatory Authority hearings on Tennessee-American’s requested rate increase continue today and Friday in Chattanooga. Next week, the authority will hold hearings in Nashville.
“The regulatory process is very open and transparent, and we have reached out to Mr. Baker and others to provide information and address their concerns,” he said. “We believe some of his misunderstandings would be resolved in that conversation, and we remain open to that meeting.”
Mr. Baker accused Tennessee-American of using the rate hike as a way of increasing its profits for the benefit of its shareholders.
“The business has become rate increases,” he said. “We’re afraid this is a very slippery slope.”
The rate increase could scare businesses away from Hamilton County, Mr. Baker argued.
Mr. Watson again disagreed.
“Water rates are based on the actual cost of providing service,” he said. “We’re investing $21 million to upgrade and enhance the water system and, like all other utilities, our costs have risen dramatically. That’s what this rate request is all about.”
Commissioner Warren Mackey said the city and county should consider taking ownership of the company.
“It has become apparent that they will continue with these rate hikes,” he said.
Mr. Watson has said the company is not for sale.
“Our only focus is on our customers and to delivering the trusted water service they’ve come to expect,” he said.
Failing a takeover bid, Dr. Mackey said, another option would be lending support to other local water utilities, whose boards are appointed by Hamilton County Mayor Claude Ramsey.
“Competition is always good,” Dr. Mackey said.
Government ownership would mean lower prices, argued Commissioner Fred Skillern. Mr. Skillern said Tennessee-American in some cases charges more than Eastside Utility District and Soddy-Daisy-Falling Water Utility District, even though Tennessee-American has a larger customer base.
Tennessee-American officials have argued that Eastside has raised its rate beyond their price, however, with a more than 50 percent increase over the past two years.
Commissioner Richard Casavant said simply acquiring the water company would not solve the problem, but he asserted that a rate increase wouldn’t do it, either.
Dr. Casavant said the volume of what the company sells is half of what it was 20 years ago.
“They have a lot of capital,” he said. “The bad thing is they don’t need it.”
The County Commission passed a resolution in April opposing the rate hike. The commission since has committed $65,000 for legal services to fight the increase.
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Government can operate a utility more efficiently and cost effectively than private industry? I hope Commissioners Mackey and Skillern paid attention to the message from Commissioner Cassavant.
Dr. Cassavant pointed out that costs are costs and ownership would not affect the relationship between costs and volume of product consumed; meaning that the city or the county could probably not operate the system any cheaper than its private owners.
The main difference would be that when revenues need to be generated, instead of being accountable to the Tennessee Regulatory Authority, money-grubbing politicians will have no real accountability at least until the next election. Municipal ownership means revenues will be generated through tax increases when rates aren’t enough.
Inaction on the part of politicians will lead to a low-quality product due to poor investment in the water system. Before moving forward, Hamilton County Commissioners should consult their colleagues in Jefferson County Alabama and see how public ownership of the water and sewer systems has worked out for them. They are trying to decide on whether or not to declare bankruptcy or raise taxes to get out from under $3.2 billion of debt associated with their system.