Tennessee-American appeals 2008 rate case

NASHVILLE — The Tennessee-American Water Co. on Monday appealed a 2008 ruling that limited the amount of its rate increase on Chattanooga customers.

Last year, the Tennessee Regulatory Authority voted 2-1 to give the water company a $1.65 million rate increase on residents and businesses instead of the $7.64 million it sought.

In their state Court of Appeals filing, water company officials charged the authority’s decision was “arbitrary and capricious” and said the agency in its Jan. 13 final written order committed “an unconstitutional taking” of its property by denying Tennessee-American a “just and reasonable rate of return.”

“We don’t believe the 2008 TRA order was just and reasonable to the company in several areas and we believe evidence presented by the company was not given appropriate consideration,” Tennessee-American President John Watson said in a statement.

Regulatory Authority spokesperson Jessica Johnson said Monday evening that agency attorneys had not seen the filing and were not in a position to comment.

Chattanooga attorney Rick Hitchcock, who helped represent the city of Chattanooga as it joined forces with the state’s Consumer Advocate and Protections Division and Chattanooga Manufacturers Association to oppose the water company’s increase, said he had not seen the actual petition, either.

“I don’t have any comment I can make at this point,” he said.

Nashville attorney Henry Walker, who helped represent local manufacturers, said historically the appellate court “has always given a great of discretion to the Regulatory Authority and I expect the same will be true here.”

Among other things, the water company is questioning whether the Tennessee Regulatory Authority’s decision to let the water company recover $3.5 million of its management fees instead of the $4.3 million it wanted was “arbitrary and capricious.”

Observers said the battle over Tennessee-American’s originally proposed 21.7 percent increase was one of the hardest-fought regulatory struggles in recent years. Tennessee Regulatory Authority directors reduced that to 4.37 percent for Chattanooga residential, industrial and commercial ratepayers.