City opposes 28% water rate hike

City opposes 28% water rate hike

October 6th, 2010 by Chris Carroll in News

Months after raising property taxes 19 percent and stormwater fees 220 percent, the Chattanooga City Council didn't need much prodding to oppose a request from Tennessee American Water to increase water rates by 28 percent.

"We've got to have skin in the game," Councilwoman Sally Robinson said during a committee hearing. "We don't control our water, and that troubles me."

But opposing the measure may cost the city up to $300,000 since the process could take until March 2011 and no one in the city attorney's office has the expertise to negotiate Tennessee American's lengthy rate proposal, according to City Attorney Mike McMahan.

"We don't understand everything in those 2,500 pages," he said. "We're not going to be prepared until we pay somebody to delve into those pages."

Tennessee American has asked the Tennessee Regulatory Authority for the increase to offset higher operating costs, fund employee pensions and boost the allowable rate of return earned by the company.

Before joining the other eight members in opposing the rate hike request, Councilman AndraƩ McGary compared the water company's request to the recent property tax hike and said residents may need to "suck it up and take it."

"I can't help but wonder if [the water company is] in the same boat as us," he said.

City and county elected officials last opposed a similar request in 2008, when Tennessee American officials asked for a 20 percent increase. The company ended up with a 4.37 percent increase.

"It's the same old story," Councilman Jack Benson said.

The Chattanooga Manufacturers Association and the consumer advocate for the Tennessee attorney general also oppose the proposal, but Tennessee American officials said the water company will lose money next year without a rate increase.

The state's largest private water company, Tennessee American services more than 350,000 residents in Southeast Tennessee and Northwest Georgia.

"We're talking an additional $4.68 a month for the average customer," company spokeswoman Kim Dalton said. "It's the lowest utility bill of the month customers pay."

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