In 2011, Tennessee American raised customers' rates 14.8 percent. In 2012, the utility raised rates 12.72 percent.
Signal Mountain officials were there to protest the hikes during related hearings both times. Such will no longer be the case.
On Monday, April 14, the Tennessee Regulatory Authority unanimously approved TAW's plan to directly adjust rates as a result of changes in costs.
"It's much easier for Tennessee American to change rates under the new regulatory environment; they don't have to go through huge hearings like [previous] times," said Mayor Bill Lusk. "I'm concerned with the new regulations. It seems like rates for anything never go down."
Under the new model, last year TAW requested a 1.1 percent rate increase. More recently, the rate decreased by seven-tenths of 1 percent, as announced by Lusk at the Town Council's April meeting.
At the council's work session earlier this month, TAW Operations Manager Kevin Rogers and External Affairs Manager Daphne Kirksey discussed the recent regulatory changes with the council.
"Our goal frankly is to have the increases that our customers are going to have to pay for to be based on infrastructure improvements and not on expense increases," Rogers said. "Now I'm not going to say we will never have an expense increase, but we are working very hard for operational efficiency."
Signal Mountain has its own infrastructure costs to consider, Lusk pointed out in a follow-up interview. Unlike other towns, Signal Mountain pumps the water it purchases in bulk from TAW up the mountain itself. As such, it has to cover the costs of maintaining the pump station itself.
"Sale For Resale customers like Signal Mountain only pay for the infrastructure that supports Tennessee American Water's supply to them," Kirksey wrote in a follow-up email. "This is determined by a cost-of-service study. They will not be paying for Chattanooga investments that do not support them."
The town is currently at the beginning of an 18-month agreement with the water utility. Town Manager Boyd Veal said he would soon be hashing out the details of the next agreement with Rogers.
"I welcome this approach far greater than the last time y'all came," Councilman Dick Gee told Rogers and Kirksey during the work session. "I have to tell you I'm a little wary because you are not a public utility. You are a monopoly. And I'm not all that confident in the TRA, frankly. So maybe we have the opportunity to dance a little bit and get to know one another a little better and be more confident that you are working for our interests and we can rely on you."
In the follow-up interview, Lusk noted that the town would always keep its options open.
"If there is another viable source of water .... that is as good or better, we will look at that," he said.