Chattanooga water rates are rising 3.57 percent, boosting the typical residential water bill for customers of Tennessee American Water Co. by 77 cents a month.
The Tennessee Regulatory Authority on Monday approved the infrastructure surcharge for 2017, effective Tuesday, to help pay for nearly $16 million of water improvement projects planned by the Chattanooga water utility.
Tennessee American Water Co. President Valoria Armstrong said the surcharge is used to recover the costs associated with renewing and replacing pipes, meeting stricter water quality standards and adding more pipes and infrastructure for new homes and businesses.
"Our investments are focused on making sure that water is always there when we need it — for our homes, businesses, public health and firefighting protection," Armstrong said in a statement Tuesday after regulators granted the company's rate increase request. "We are committed to high standards in water quality and reliability of service to our customers."
The largest capital project this year for the water utility is to pay for most of a $2.5 million project to install a third water pipe across the river for customers in North Chattanooga, Red Bank and Signal Mountain. Last April, the larger of the two existing pipes across the Tennessee River suffered a large break which took three weeks to repair. Tennessee American had to replace 25,500 feet of water main last year and the addition of the third pipe this year "will assure redundancy and resiliency of water service," Armstrong said.
In addition, Tennessee American Water said it plans to invest approximately $2.9 million to replace aging water mains in the community.
The yearly rate increase in the "capital recovery rider" will be the fourth for Tennessee American Water since the state adopted its current method of setting water rates for private utilities in 2014. But the increase will be the smallest in three years and should be partially offset by another rider added to the bill each spring to reflect the operating expenses and results for the utility.
Because the costs of electricity, labor and other expenses was not as great as estimated compared with the company's sales, the Tennessee Regulatory Authority is expected to grant a slight reprieve in monthly rates later this year.
Joe Shirley, the deputy chief for the utilities division of the TRA, said Tuesday that the water utility's request "was made in accordance with a tariff approved by the TRA in April 2014 which allows the company to make annual rate filings to recover infrastructure costs."
The American Society of Civil Engineers last year gave Tennessee's infrastructure, including its water pipes and utility systems, a "C" grade. The report estimated that Tennessee needs to spend $2.7 billion over the next 20 years to keep up with drinking water infrastructure needs.
Tennessee American is the largest privately owned water company in Tennessee and supplies water to about 390,000 persons in the Chattanooga area.
Contact Dave Flessner at firstname.lastname@example.org or at 423-757-6340.