Tennessee American Water has proposed raising residential rates an average of 24 cents per month, or a 1.1 percent increase, to raise $7.5 million in new capital for 2014.
The rate hike, which comes on the heels of hard-fought double-digit rate increases in 2011 and 2012, would raise the average water bill to $21.80 in early 2014.
Cash raised through the rate increase, which is considerably smaller than the previous increases, would go toward refurbishing the regulated water monopoly's sludge handling process. The company is retooling its sludge scrubbers to help Chattanooga comply with a federal order mandating that the city clean up its discharges into the Tennessee River, said Deron Allen, president of Tennessee American Water.
"That's almost a $5 million investment alone, and most of it we're spending this year," he said.
But unlike previous rate hikes, which grew into contentious and expensive affairs, Allen hopes that a new legal framework set up by the Tennessee legislature will lead to a new era of smaller and less cumbersome rate hikes, which will include pass-through funding - called trackers - for fixed costs like fuel and electricity.
"The trackers, they will rise and fall according to what expenses are," Allen said. "We're hoping there will be smaller impacts over time, and delay the need for big rate cases."
See more in tomorrow's Times Free Press.