Q&A: New Tennessee American Water chief continues family tradition

Q&A: New Tennessee American Water chief continues family tradition

June 10th, 2011 in Business Around the Region

Tennessee American Water President Deron Allen talks about service to customers from the board room at the private utility's Broad Street headquarters.

Photo by Tim Barber /Times Free Press.

Deron Allen

Title: President of Tennessee American Water

Age: 45

Education: Bachelor's and master's degrees in geology from Indiana State University and an associate degree in applied science from Crowder College.

Career: He joined American Water Works Co. at Indiana American Water in 1985. A native of Connersville, Ind., Allen has worked at six utility subsidiaries of the national water firm during his 26-year career in the water utility business. He served as vice president of operations for Indiana American Water for a year before joining Tennessee American at the end of March.

Personal: He and his wife have a 22-year-old son in college and are moving to Chattanooga from an Indianapolis suburb.

Deron Allen grew up watching his father fix water mains in Indiana and, along with his brother Dan, has spent more than two decades working for the same company that employed their dad for more than 30 years - American Water Works Co.

After working nearly every type of job at a half dozen water companies owned by American Water, Allen came to Chattanooga in March to head the $39 million-a-year Tennessee American Water Co. He succeeds John Watson, who retired after nearly three decades with the company.

For all his experience, Allen concedes it was literally a whirlwind first month in Chattanooga with state regulators approving the biggest rate increase ever for the local utility on April 4 and three weeks later tornados knocking out power to many of the utility's pumping stations.

The new Tennessee American Water president knew about tornados from his youth in Indiana and his wife from Missouri. But he didn't expect to be hit by multiple tornadoes in Chattanooga. Generators kept the power on to keep water flowing despite widespread power outages this spring, which Allen said underscores both the importance and resilience of the water utility.

Allen talked Thursday with business editor Dave Flessner about Chattanooga's primary water utility.

Q: The Tennessee Regulatory Authority granted Tennessee American a 14.76 percent rate increase in April, which will give the company about $5.5 million more a year. That was the biggest ever for the utility but only half what you requested. Are you satisfied with the TRA decision?

A: When we file a rate request, we're requesting what we actually need to do in investments. I can't say that we were ecstatic about their ruling, but we respect their decision. We had to adjust our budget going forward.

I think it's important to remember what an incredible bargain we offer even with this increase. A gallon of water weighs 8.43 pounds and we're sending it to our customer's tap for a penny a month. We do a lot of due diligence internally to manage our costs to keep our expenses down.

Q: What is your major focus for Tennessee American?

A: We want to build our relationships in the community. Our customer satisfaction ratings are some of the highest of any American Water Works utility, and I think our employees do a good job. We're one of Chattanooga's oldest companies, delivering water for more than 120 years. But I don't know that our customers always know about what we do. So we are going to form a customer advisory committee to try to get some input from our customers and put together a panel to reflect the different types of customers that we serve. We need to educate our customers about the need to continue to invest in infrastructure improvements.

Q: Tennessee American is the state's biggest privately owned water utility. Why do you think private ownership of a water utility is better than the public ownership of most other water systems in Tennessee?

A: If the water utility was municipally owned, the city and county would have to come up with about another $4 million a year in taxes because we pay property and other taxes and government-owned utilities do not. Secondly, municipally owned utilities can raise their rates any time they want and they often do, especially for those who don't live in the main city or for tap fees for new developments. We have lower tap fees and our rates are carefully reviewed by the Tennessee Regulatory Authority.

Q: American Water Works recently sold some of its subsidiaries to local governments in Arizona and New Mexico. Does American Water want to sell Tennessee American?

A: No. That's not why I'm here.