Tennessee-American Water company increases differ

NASHVILLE — Tennessee-American Water Co. officials have said for nearly six months that their latest proposed rate hike amounts to a 20.58 percent increase for the Chattanooga area customers the company serves.

But the size of the increase for the company’s 74,000 customers actually depends on where they live, company officials have acknowledged.

In a PowerPoint summary of his testimony, figures provided by Tennessee-American’s own engineering consultant, Paul R. Herbert, state that Chattanoogans’ rates would increase by 21.7 percent under the company’s rate request. The request is pending before the Tennessee Regulatory Authority.

Water rates for Lookout Mountain, meanwhile, would go up 13.2 percent, while rates for Lakeview would soar 27 percent, according to the document. The communities of Lone Oak and Suck Creek would not see increases, according to the summary.

Rick Hitchcock, an attorney representing Chattanooga, said Tuesday the city was “surprised to see” the water company had retained Mr. Herbert “to design rates to collect much more than it had announced it was seeking in this rate increase. We asked him why he did that. The answer was it was a policy decision of Tennessee-American.”

“We also asked him why he suggested design rates to impose a much lower increase on Lookout Mountain than on Chattanooga residents, and he acknowledged that was a policy decision of Tennessee-American,” Mr. Hitchcock said.

Tennessee-American Comptroller Mike A. Miller, who handles water rates cases in half a dozen states for the firm’s parent company, American Water Works Co., said Tuesday night that Chattanooga ratepayers are not subsidizing rates for Lookout Mountain residents.

“We wanted to clear one thing first,” Mr. MIller said. “The reasons we heard that were given for the increase for 20.58 percent to 21.7 percent have nothing to do with a shift of the mountain rates to Chattanooga. I wanted to make that clear. That’s just not factual.”

Mr. Miller also disputed the Herbert PowerPoint figure of a 21.7 percent increase for Chattanooga. But he did not provide what he said would be a more accurate percentage.

“We would need to sit down with you later and explain this in depth,” Mr. Miller said. “When you talk percentages, it gets confusing.”

He said the figure to pay attention to for Chattanooga ratepayers was the $3.65-per-month increase the company says would be paid by the average residential user. That would bring the average bill for someone using 4,033 gallons of water a month to $20.19, the company has said.

Mr. Miller also took issue with another section of the water company consultant’s presentation that said the overall effect of Tennessee-American’s proposal would result in a 21.6 percent increase for all its customers.

The figures to pay attention to were not in the presentation but in an accompanying schedule of costs and charges, Mr. Miller said.

That document shows the increase to the water company’s overall water rates is 21.2 percent, or $7.58 million, Mr. Miller said. But if Tennessee-American’s request is granted, the effect of the overall increase would be the company’s oft-cited $7.644 million, or 20.58 percent over current total revenues, Mr. Miller said.

That is because the company is not seeking to boost other charges such as those for bounced checks and reconnection fees. If the TRA grants the company’s rate request — which follows a 12.3 percent increase approved last year — rate payers would pay higher late fees, which are five percent of a bill.

Mr. Miller said the average residential bill on Lookout Mountain would increase by $2.92 and the average bill would be $24.93 if Tennessee Regulatory Authority directors approve the rate increase. The company has 1,826 residential customers and 85 commercial customers on the mountain.

In Lakeview, the average residential bill would rise $5.37 to $24.39, Mr. Miller said. There are 2,796 residential users and 164 commercial users in that area, figures show.

Lone Oak’s residential users on average would see a $3.57 decrease and still pay $39.94 on average, according to Mr. Miller. There are 109 residential users there.

The company’s 209 customers are Suck Creek Mountain would see on average a reduction of $5.75 percent in their monthly water bill, leaving them still paying $29.44, Mr. Miller said.

He said the company is moving toward a single rate for Lookout Mountain, Lakeview, Lone Oak and Suck Creek. All four areas are on mountains or located alongside Missionary Ridge.

Tennessee-American Water Co. President John Watson said pumping water to these customers costs more money.

In related action, testimony continued in Nashville on the water company’s rate increase request.