Water rate hike could set new mark

Water rate hike could set new mark

April 2nd, 2011 by Ellis Smith in News

Chattanooga water rates would rise nearly 15 percent-the biggest hike in history-if state regulators approve a motion circulated Friday by the chairwoman of the Tennessee Regulatory Authority.

The proposal, which could be decided Monday, follows hundreds of legal filings, months of arguments and millions in legal fees arising from Tennessee American Water's initial 30.5 percent water rate increase proposal.

Under the plan from TRA Chairwoman Mary Freeman, average residential consumers would pay an additional $2.49 per month, which would yield an additional $5.5 million for the utility, according to the regulatory agency.

The utility's initial proposal was met with fiery criticism from industry leaders, consumer groups and the city of Chattanooga.

But outgoing Tennessee American President John Watson said the company needs additional capital to maintain aging infrastructure, which former employees have alleged is falling apart.

Watson acknowledged in testimony to the TRA that "the company cannot continue to perform" maintenance and other operations in the foreseeable future without a cash infusion.

The company suggested in filings with the regulatory agency that it could lose money for the year without additional financial resources.

Tennessee American spokeswoman Kimberly M. Dalton didn't have any immediate comment Friday.

"The company will review the motion over the weekend and wait for the final deliberations on Monday," she said in an email late Friday.

A Tennessee American official said it has spent $121 million over the past 15 years upgrading water intakes and purification and distribution systems. That includes an ongoing $6.7 million upgrade to the Citico water treatment plant on the Tennessee River, the company said.

But from the University of Tennessee at Chattanooga to the Community Kitchen, business leaders and consumers have said a rate hike in a tough economy would make a difficult situation worse.

The city, along with the Chattanooga Regional Manufacturers Association, has opposed the scope of the increase.

City spokesman Richard Beeland declined comment.

Tennessee's Office of Consumer Advocate argued that the TRA should grant only a $589,000 hike, or 29 cents per month.

According to statistics released by the consumer advocate, Freeman's proposed increase would make Chattanooga's water the most expensive of any major Tennessee city.

At her proposed average level of $19.11 per month, Chattanoogans would pay more than twice as much as Memphis residents, where the average residential bill is $8.73. Nashville's residential average is $13.41 and Knoxville's is $18.85, according to the consumer advocate.

The Chattanooga water company, the largest private water utility in Tennessee, previously requested a 21.6 percent rate increase in 2008. But the TRA granted only a 4.4 percent hike.