Rhetoric escalates in standoff over sewer billing

Rhetoric escalates in standoff over sewer billing

April 5th, 2012 by Ansley Haman in News

The Tennessee American Water Company is seen in the foreground of this aerial file photo.

The Tennessee American Water Company is seen in...

Photo by John Rawlston /Times Free Press.

Tennessee American Water is holding "a gun to [the] heads" of local sewer utilities, the attorney for the Hamilton County Water and Wastewater Treatment Authority says.

The two entities, along with Chattanooga and four North Georgia utilities, have been coordinating a response to the private water company's decision to end its 60-year practice of providing sewer billing services.

Tennessee American, which doesn't provide sewer service itself, is the only privately owned water company in the state, others are owned by municipalities. Because most cities have government water companies, those utilities bill for the sewer authorities as well, said WWTA attorney Chris Clem.

Usually when sewer customers don't pay a bill, a municipal water company has the option of cutting off water service until they do. For public health and practical reasons, however, sewer authorities cannot shut off sewer lines, WWTA Executive Director Cleveland Grimes said.

Major concern

A major concern of the sewer authorities that use Tennessee American for billing is that, in addition to the inevitable price increase they'll have to institute to pay for billing services, they'll lose their enforcement ability unless Tennessee American agrees to or is required to continue shutting off water for those who don't pay.

Tennessee American wants to enter a contract for the utilities to pay for one of two shutoff service options, but the utilities are pursuing a legislative fix to compel the water company to continue the service as it's now done.

A bill is pending in the Tennessee General Assembly that would compel the water company to continue shutoff services for the utilities, but Tennessee American Government Affairs Manager Kino Becton said it isn't necessary.

"We're willing to work with them," he said. "You really don't need a legislative fix to this."

Though Tennessee American is a private company, it is closely regulated by the state through the Tennessee Regulatory Authority. A 1992 tariff governs the price it charges to handle billing for local sewer utilities.

Becton released a statement Wednesday saying company officials thought they had an agreement with the utilities to provide data and shutoff services for them after Oct. 31, but that "WWTA officials have refused to sign a contract and agree to a tariff change."

WWTA attorney Chris Clem said there has never been an agreement among the parties and that the company is being disingenuous.

"[Tennessee American] doesn't play well with others," Clem said.

He said Tennessee American's statement could have said, "We put a gun to their heads and told them they should accept our first and final offer."

Exercising option

Tennessee American officials have said the company is exercising a six-month contractual escape clause and have provided a list of third-party billing services that could handle the utilities' needs.

Utilities say finding companies that bill for sewer service is complicated because so few sewer companies do their own billing.

If Tennessee American stops the billing, local utilities must create billing infrastructure from scratch before Oct. 31, possibly at a cost of $2 or more per month per customer, or at least $24 a year in added costs for each customer.

Each utility currently pays $40,000 a month for Tennessee American to do its billing. A Tennessee American proposal presented in March would charge utilities $54,000 a month for data and cutoff services -- $14,000 more than they currently charge for billing without actually doing the billing anymore, Clem said.

Tennessee American President Deron Allen said last week that the company told the utilities last June that it planned to discontinue billing.

"When we met with them in June, none of this was conveyed to us. Not until the official letter was sent out to them that we then started to hear concerns and rumblings about the situation," Becton said Wednesday afternoon. "We came to the table again to try to help them as best we could."

Both Grimes and Becton said the parties are planning to sit down again next week.

Clem said the utilities are working together on a collective solution and will sign a contract when they reach an agreement among themselves "even if an agreement is because the gun is to our heads."

Staff writer Tim Omarzu contributed to this report.