published Tuesday, October 16th, 2012

12.72% water rate hike approved for Tennessee American Water customers

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BY THE NUMBERS

New Tennessee American Water rates for a typical residential user:

Increase in the Chattanooga service area by $2.38 per month, or about 8 cents per day, to $21.58 per month.

Increase in the Lookout Mountain service area by $3.16 per month, or about 10 cents per day, to $28.08 per month.

Increase in the Lakeview service area by $2.75 per month, or about 9 cents per day, to $24.85 per month.

Increase in the Suck Creek service area by $5.14 per month, or about 17 cents per day, to $46.72 per month.

Increase in the Lone Oak service area by $6.24 per month, or about 21 cents per day, to $57.68 per month.

Source: Tennessee American Water

NASHVILLE -- Most local customers of Tennessee American Water will pay 12.72 percent more on their monthly water bills instead of up to 35 percent under a settlement accepted Monday by the Tennessee Regulatory Authority.

The new rates take effect Nov. 1 for residents of Chattanooga, Lookout Mountain, Lakeview, Suck Creek and Lone Oak service areas.

Residents and businesses served by the town of Signal Mountain and Walden's Ridge Utility District will see no increases. The communities had threatened to bolt from the investor-owned utility.

TRA members approved the deal in a 10-minute proceeding and complimented the company, State Attorney General Bob Cooper's office, Chattanooga and other interested parties for reaching the settlement instead of battling it out in an expensive, full-blown rate case.

The settlement authorizes a rate increase of $5.2 million of the $10.6 million sought by Tennessee American. A typical residential Chattanooga residential customer who uses 4,153 gallons of drinking water per month will pay $2.38 more per month, bringing the bill to $21.58 per month, the company said.

Despite paring the initial request substantially, it still represents the second-largest Tennessee American increase in memory. Cooper's Consumer Advocate and Protection Division originally had argued the increase should have been about $2.8 million.

"I think it's a fair, good settlement," said Tennessee American President Deron Allen, who thanked the Consumer Advocate Division for brokering the agreement.

While the company didn't get everything it sought, Allen said, "everything's a little give and take. You're not going to get everything you want. We wouldn't have gotten everything we wanted if we'd gone through a full hearing either."

During the proceeding, Assistant Attorney General Ryan McGehee with the state's Consumer Advocate office told the three-member TRA panel that officials saw a "lot more transparency in the information" provided by Tennessee American this time "and a lot less litigation, and we appreciate that."

Noting there were six parties involved, McGehee said "all had competing interests and that can make settlement difficult sometimes."

"Not one party obtained everything they wanted," the attorney said. "There was a lot of give and take, and it was hard fought. There was disagreements on the individual components that make up" the agreement. "But in the aggregate, we feel it was a fair result for ratepayers and the company."

TRA Chairman Kenneth Hill congratulated all sides for reaching the agreement. In recent years, rate hearings for Tennessee American have turned into fierce, expensive legal brawls between the company and intervenors on behalf of residential and business customers.

Tennessee American recently underwent changes in management as well as legal representation with the company's chief attorney in rate cases now being Melvin Malone, a former TRA director.

As part of the agreement, Tennessee American dropped a proposed "distribution system infrastructure charge" that would have covered the cost of the company's investment in infrastructure and, critics said, given the company a guaranteed rate of return.

The water company also gave up on its request for an automatic pass-through on future increases for fuel, chemicals and pensions without coming back to the regulatory agency for approval.

Those would have driven increases from the originally proposed 24.9 percent increase in rates up to 35 percent, the attorney general's office had argued.

Industrial users will see more of a shift from volumetric charges to fixed charges, making it easier to plan.

Besides the Consumer Advocate office, Chattanooga, the Chattanooga Area Manufacturers Association, Signal Mountain and Walden's Ridge Utility District intervened in the case and signed the settlement.

Contact staff writer Andy Sher at asher@timesfreepress.com or 615-255-0550.

about Andy Sher...

Andy Sher is a Nashville-based staff writer covering Tennessee state government and politics for the Times Free Press. A Washington correspondent from 1999-2005 for the Times Free Press, Andy previously headed up state Capitol coverage for The Chattanooga Times, worked as a state Capitol reporter for The Nashville Banner and was a contributor to The Tennessee Journal, among other publications. Andy worked for 17 years at The Chattanooga Times covering police, health care, county government, ...

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