What should water cost us?

What should water cost us?

March 1st, 2011 in Opinion Free Press

The Chattanooga area's people, homes and businesses are blessed with a virtually unlimited quantity of pure, good-tasting water to meet both our needs and desires, and it is delivered to us conveniently at the turn of a tap.

We are thankful not to have to dip water from the river. But we may tend to take the good service of Tennessee American Water for granted.

Currently, the water company is requesting a price increase for its service.

The reason it has to "request," instead of just setting the price itself, is that our local water service is a monopoly. It would be uneconomical and foolish to have several competing water companies, wouldn't it? But we wouldn't like to have a monopoly dictating costs to us with no reasonable option. That's where the Tennessee Regulatory Authority comes in. It's a three-member state body that analyzes costs and controls utility prices.

What should the water company be permitted to charge?

Obviously, it should be allowed to charge enough to cover its costs in providing us good service - purification, maintenance of the distribution system, labor costs and other necessary business expenses - plus a fair profit for its efforts.

After all, the reason we have good water service is that a great many people have invested their money in the water company, with the reasonable expectation they will earn a fair return.

Tennessee American is requesting a $9.9 million increase - which reportedly would amount to $4.68 a month for the average residential customer. The last increase was in October 2008. The company says it needs the increase to cover its rising costs in providing service. The Tennessee Regulatory Authority will consider the facts and make a decision.

Nobody wants to pay more for anything. But nobody wants any deterioration in our good water service. We should want to be fair to all concerned - the water company investors and the 75,000 water customers, 63,000 of them at residences.

Our current average monthly home water bill is $16.62. Isn't that a bargain for home-delivered, good water? The requested increase would raise that to $21.30. (Some water bills also include a "city sewer service charge" that does not go to the company but is necessary for local sanitation services.)

Water company President John Watson said, "Our costs for energy, chemicals, labor and taxes have all gone up, and we need to recover those expenses to continue to make investments in this water system."

We should want the company to continue its excellent service, and earn a fair profit for providing the good water we need. Balancing all needs and interests isn't easy, though. It is important to be fair to the company and to our home, business and industrial water customers. We expect the Tennessee Regulatory Authority to do that in hearings on Tennessee American's rate increase request.