A company that provides water to tens of thousands of Chattanoogans may receive a small fraction of the rate increase it was seeking from state regulators, according to a recent motion.
Tennessee American Water is asking the state’s public utility commission to approve a nearly 20% increase in water rates, a request that prompted strong pushback from Chattanooga Mayor Tim Kelly. The utility commission is meeting Tuesday morning in Nashville to consider the item.
In a motion filed Friday, Chair David Jones said the board should approve an annual rate increase of about $1 million for the company, short of the nearly $14 million Tennessee American Water was initially seeking. This amounts to an increase of about 1.45%.
(READ MORE: Chattanooga mayor blasts Tennessee American Water’s ‘outrageous’ plans for rate hike)
The company’s proposed rate increase is primarily driven by investments Tennessee American Water is making to maintain and improve infrastructure, which accounts for more than 50% of its request, according to Tennessee American President Grant Evitts.
The utility said it has maintained clean and abundant water sources in Chattanooga for more than a century, but meeting increasingly strict water regulations and expanding capacity for growth in the city will require significant new investment.
The company’s most recent general rate increase was in June 2012, and the hike is necessary to support more than $287 million in investments made or planned by Tennessee American from 2012 through the end of 2025, according to spokesperson Daphne Kirksey.
“We appreciate the careful consideration and review from the Tennessee Public Utility Commission in our request to establish new customer rates to continue necessary investments to maintain and upgrade our water systems,” Daphne Kirksey, a spokesperson for Tennessee American Water, said in an email. “We will carefully review the final order once it has been officially adopted and issued by the TPUC and will have more information to share, including the impact to customers, in the coming days.”
City officials and the state’s consumer advocate division have strongly criticized the request. In October, Kelly called the move outrageous. He told state regulators the company intends to raise rates for Chattanoogans while lowering costs for its newest customers in remote areas.
“Our country is in the midst of a cost of living crisis, and we’re feeling it here in Chattanooga,” Kelly said at the time. “The cost of housing, the cost of groceries and almost everything else has increased substantially. The last thing that families and businesses in Chattanooga need right now is another increase in their monthly water bill.”
The company would increase rates paid by city residents to cut bills for Suck Creek customers by more than 30% and slash payments for residents of multimillion dollars homes in Jasper Highlands by 29%, according to the city. Tennessee American Water’s request follows rate rider program that has allowed it to increase rates by about 37% over a decade, which is on top of the 20% the utility is seeking from the state.
“It’s Tennessee American’s strategy to break out of its service area that this commission has approved and that it has served more than 150 years,” Rick Hitchcock, an attorney representing the city, told the utility commission in November. “It’s a growth strategy, and it’s a growth strategy that they seek to implement on the backs of Chattanooga residents.”
A spokesperson for the city said officials were waiting for a final decision from the utility commission before making a comment.
Tennessee American Water serves 420,000 people in Tennessee and North Georgia and has about 67,000 water meters in the Chattanooga area. A $14 million rate increase would hike residential rates by approximately $4.25 per month, according to the public utility commission.
Contact David Floyd at dfloyd@timesfreepress.com or 423-757-6249.
Staff Photo by Robin Rudd / Tennessee American Water’s chemical control building and raw water control building are located along Riverside Drive in Chattanooga.