Water bills will increase for nearly 28,000 homes and businesses in Hixson next week and could be going up the following week for more than 78,000 customers of Tennessee American Water in Chattanooga.
The Hixson Utility District will boost monthly water bills by 81.5 cents a month for the typical residential water user, starting Aug. 1, by adjusting the minimum monthly charge consumers pay for residential connections. The typical residential water charge for the bimonthly bill in Hixson will go up about $1.63 to cover inflationary cost increases since rates were last adjusted five years ago.
Chattanooga water users may see even bigger increases in their monthly bills if regulators agree to allow Tennessee American Water to pass along $20.4 million of annual expenses the utility has incurred for drinking water system upgrades and extensions in the past year. Tennessee American has asked the state's Public Utility Commission for permission to boost water rates, starting Aug. 8, while the commission continues to consider the company's annual filing to recover its capital costs.
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Daphne Kirksey, a spokeswoman for Tennessee American Water, said the company is proposing to raise the average Chattanooga residential customer by $1.30 per month, based on 4,154 gallons of usage. Utilities in Tennessee are allowed to pass along the cost of approved capital investments needed to maintain and meet water quality and delivery requirements, subject to regulatory review by the Tennessee Public Utilities Commission.
"Tennessee American Water has requested that TPUC permit the rates to become effective Aug. 8 while TPUC determines a hearing date," Kirksey said in an emailed statement.
The Hixson Utilities District Board has already approved its water rate increase, which will be added to August bills and begin showing up with the next billing cycle. Greg Butler, the executive director of the Hixson water utility, said in a telephone interview Wednesday that chemical costs were up more than 60% and other material expenses jumped by more than 35% in the past year.
"We continue to see higher costs for materials, chemicals, energy and equipment, but we're in a very good financial situation to be able to absorb some of these increases," Butler said.
In January, the Hixson utility contracted with the utility consulting firm Jackson Thornton Utilities to conduct a cost-of-service study. The consultants determined that expenses related to water production have increased at a greater rate than revenues, "and that trend is projected to continue for the foreseeable future," Butler said.
"Periodic rate studies are recommended for the utility industry, and the last rate study was almost 10 years ago," Hixson Utility Board commissioners said in a statement to customers. "The rate structure was modified as a result of the previous study, but the district has not increased rates since the mid-1980s."
Although the minimum charge has increased, the per gallon rate for water has not changed in decades.
In 2014, the Hixson water utility voted to raise the minimum charge about 30% over the next three years after going nearly two decades without any rate changes.
While water rates have not changed, sewer rates have risen by double-digit levels in recent years. Hixson Utility District also bills for sewer fees for both the city of Chattanooga and the Hamilton County Water and Wastewater Treatment Authority, which more than doubles the effective bill for most consumers.
Despite the increase in water rates, the Hixson water utility still boasts some of the cheapest municipal water in Tennessee. The Hixson Utility District is the only local water utility able to get all of its water supplies from springs and wells. The utility treats the water with a few chemicals, but it doesn't have to filter and treat the water like most utilities that tap into surface water like the Tennessee River.
Hixson Utility District is the largest of the six water utility districts in Hamilton County, but most of the county is still served by Tennessee American Water, which is owned by American Water Works.
Contact Dave Flessner at dflessner@timesfreepress.com or at 423-757-6340. Follow him on Twitter at @dflessner1