Tennessee American Water to stop collecting sewer and garbage fees for area municipalities

Tennessee American Water to stop collecting sewer and garbage fees for area municipalities

February 11th, 2012 by Mike Pare in Business Around the Region

Tennessee American Water no longer will collect sewer and garbage fees for some area municipalities after October, a change city officials say could prove costly for them and confusing for ratepayers.

"It's kind of a surprise," said Jerry Stewart, Chattanooga's director of waste resources, adding the privately held water company had been collecting sewer fees for the city since the 1950s.

Among cities affected by Tennessee American's decision are Red Bank, East Ridge and Rossville.

"It adversely affects Red Bank," said Mayor Monty Millard, citing the city's garbage fee that's collected by the company. He said that the move will increase Red Bank's costs, but he couldn't say by how much.

Tennessee American spokeswoman Jessica Presley said the company decided in 2011 to exit billing for municipal sewer and other services by Oct. 31.

"We've made a decision to focus on our core business of providing quality, reliable water to [our] customers," she said.

The water company has contracts to do the billing with some area cities and the Hamilton County Water and Wastewater Treatment Authority, the spokeswoman said.

The water company is paid a fee for the billing, but the rate has not changed since the 1970s, Presley said.

Stewart said he doesn't know how much it will cost the city to switch to other potential billing options, but that the cost is expected to be passed onto ratepayers.

"Tennessee American is probably the most efficient way to do it," he said.

Stewart said the city could talk with EPB about collecting the sewer fee or other utilities, or it could work with a private company.

Millard said he understands that Tennessee American is upgrading computer software and it would be more expensive to continue with the third-party billing.

He said he's leaning toward suggesting that Red Bank handle future billing in-house. But that may mean expanding the hours of an existing employee or hiring someone new, Millard said. Currently, it costs Red Bank about $15,500 a year, he said.

Millard said his goal is to have a solution for the billing matter when the city's fiscal year ends June 30.

East Ridge City Manager Tim Gobble said billing for a sanitation fee is affected by Tennessee American's action for about 95 percent of residents.

He said East Ridge could collect the fee with an existing or new employee, contract with another entity or eliminate the levy and increase property taxes to cover the loss of revenue.

Gobble said if the city had to hire someone, that could cost $25,000 to $30,000 annually plus benefits.

Rossville Mayor Teddy Harris said the system is working well now.

"The thing is, it's going to cost residents more money for two bills than one," he said. "They're just not being a good corporate citizen."

Harris said he emailed the Tennessee Regulatory Authority with his concerns.

Staff Writer Tim Omarzu contributed to this story.