State, city won’t use disputed consultant in Tennessee-American rate case

NASHVILLE — State and city of Chattanooga attorneys have agreed to go along with Tennessee-American Water Co. officials’ demands they not use a former executive at Tennessee-American’s parent company as a consultant in the water company’s ongoing rate-increase case.

In an agreed order filed Tuesday with the Tennessee Regulatory Authority, attorneys with the state’s Consumer Advocate and Protection Division and the city said they would not use Frank Impagliazzo “as a consultant in any way in this proceeding.”

But on another front, the Tennessee attorney general’s consumer advocate, Tim Phillips, and Chattanooga’s legal team are digging in their heels against Tennessee-American’s effort to strengthen an existing protective order issued by the regulatory authority. The order seals off from public view certain financial information about Tennessee-American and its parent company, the New Jersey-based American Water Works Co.

The back and forth on the two issues was contained in a series of filings made Tuesday in the case. Tennessee-American officials are asking regulatory authority commissioners to approve a 20.58 percent rate hike for Chattanooga residential and business users after an authority-approved 12.3 percent increase in May 2007.

The actual case is not expected to go before regulatory authority commissioners until later this summer or in early fall.

In regard to the issues surrounding Mr. Impagliazzo, attorney Rick Hitchcock, who is helping to represent Chattanooga, said the city’s goal in the proceeding is “to get to the substance of the matter and to avoid continuing delays involved in these extraneous issues.”

“The city believes that the huge rate increase being sought is not justified on its merits, and we’re anxious to get to its merits,” Mr. Hitchcock said.

Sharon Curtis-Flair, a spokeswoman for the state attorney general, said in an e-mail statement that “the agreed order resolves the issue of this witness’ participation in the trial. This was a strategic decision made in the interest of moving forward and maintaining the focus of the litigation on the rate increase petition.”

Efforts to contact Tennessee-American spokeswoman Kim Dalton late Tuesday afternoon were unsuccessful.

The flap over Mr. Impagliazzo, a former executive with American Water, surfaced several weeks ago when state officials listed him and his resume in a filing that dealt with their Washington, D.C.-based consultants, Snavely King Majoros O’Connor & Bedell Inc.

Tennessee-American lawyers and officials quickly objected, arguing that Mr. Impagliazzo’s severance agreements with American Water prohibited him from consulting for the state. They also objected to the resume’s listing of his achievements at American Water, arguing it was confidential information.

In the order, the city and state agreed that anyone from Snavely King, as well as other consultants or witnesses they use, “will not directly or indirectly use confidential information provided to them by FI (Mr. Impagliazzo).”

The order also requires the state and city to file all pre-filed testimony as “confidential and under seal” in agreement to the existing protective order. It gives Tennessee-American lawyers four business days to see if the testimony has any ties to Mr. Impagliazzo.

But separate Tennessee-American efforts to strengthen the protective order itself are drawing protests.

“We are concerned about the use of broad protective orders to shield from the public information presented to the (Tennessee Regulatory) Authority that its members are being asked to consider in reaching their decisions,” Mr. Hitchcock wrote in the filing.

His filing describes the existing protective order, issued by hearing officer Richard Collier, as “unnecessarily broad” and states that Chattanooga officials “believe that (Tennessee-American) is seeking unfair tactical advantage and is seeking improperly to close portions of what should be a public proceeding.”

Tennessee-American attorney Dale Grimes argued last week that the additional moves were needed to prevent the company from violating the U.S. Securities and Exchange Commission’s fair-disclosure provisions on publicly traded companies.

In the state’s filing, Assistant Attorney General Ryan L. McGeehee took issue with a proposed special protective order from Mr. Collier, who also is the regulatory authority’s chief counsel. The proposal, Mr. McGeehee argued, is unclear on whether the city and state would be required to defend against potential Tennessee Open Records Act challenges seeking access to “confidential information.”

He also wrote that the definition of confidential information gives Tennessee-American “broad discretion to designate as ‘confidential’ anything it sees fit.”