No drought for water prices

PDF: Tennessee American's filing

Chattanooga residents can add water to the list of commodities such as fuel and electricity that are going up in price.

Tennessee-American Water Co. on Friday afternoon filed a request with the Tennessee Regulatory Authority to raise residential water bills by an average of $3.65 per month, or 20.58 percent. The increase would be the largest in the company’s 138 years.

“There have been a lot of utility rate increases in the community,” Tennessee-American President John Watson said. “That says there are costs being incurred by utilities. Our filing is based on what our needs are.”

The Tennessee Regulatory Authority has up to six months to approve the increase in the full amount, deny the increase, or approve a partial increase.

Mr. Watson said Tennessee-American, which had revenue of $37.5 million last year, wants to raise an additional $21.4 million to pay for infrastructure improvements.

“I’m very disappointed they’re asking for such a large increase after receiving the 12.3 percent increase (in May 2007),” Chattanooga Mayor Ron Littlefield said. “We contested that one. I’m confident we’ll contest this request as well.”

Manufacturing leader Ray Childers echoed Mr. Littlefield’s opposition to the proposed rate hike.

“That’s terrible,” said Mr. Childers, president of the Chattanooga Manufacturers Association. “I’m amazed they would do that. It seems like every time we turn around someone is raising prices. Prices are not being raised by normal amounts.”

The average cost of a regular gallon of gasoline in Chattanooga on Friday was $3.16, according to AAA’s Daily Fuel Gauge Report. A year ago a regular gallon cost $2.40, records show.

EPB and other regional power providers in April will begin passing through a 9 percent rate increase by the Tennessee Valley Authority, EPB President Harold DePriest said. The increase includes a 6 percent increase in the base rate that TVA charges utilities, he said, and 3 percent more for higher fuel costs. EPB and other utilities simply are passing along the increased rate and are not gaining additional revenue, he said.

Mr. Watson said water bills also include state sales tax and municipal sewer charges and, in some areas such as Red Bank, garbage collection fees.

Typically, the Tennessee Regulatory Authority, which oversees utilities, approves a lower amount than the water company requests. The last increase was 12.3 percent in May 2007, the highest single increase up to this time. The utility had asked for a 19.7 percent hike then.

The proposed rate hike would provide $8.8 million for improvements to the company’s Citico Water Treatment Plant on Riverfront Parkway, including replacing a 92-year-old sedimentation basin. The hike also would allocate $6.6 million for maintenance on water mains and hydrants as well as installing electronic water meters.

Tennessee-American’s 2007 rate increase generated $27 million in additional revenue that the company invested in infrastructure, Mr. Watson said.