State regulators have approved a roughly 1.5% increase in water rates for Chattanoogans, which is a small fraction of the nearly 20% initially proposed by Tennessee American Water.
The Tennessee Public Utility Commission approved the smaller hike during a brief online meeting Tuesday morning, prompting Chattanooga Mayor Tim Kelly’s office to declare victory.
In a news release, Kelly said this marks a big win for Chattanooga residents and thanked the board for “recognizing the truth.”
“Chattanoogans are already paying enough in their water bills to cover the cost of the infrastructure and staff needed to provide our city with water,” Kelly said. “As we battle the nationwide increase in cost of living, the last thing Chattanoogans needed was a big increase in our water bills. Our experts and the utility commission’s consumer advocates should be commended for presenting a strong case and getting the job done.”
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The decision came after Kelly expressed strong opposition to the proposal during a public hearing in October. On Tuesday, the public utility commission also denied a request by Tennessee American Water to charge city residents higher rates so customers in outlying areas could pay less, the mayor’s office said.
With a proposed area-wide increase of 19.7% and an increased rate for city customers, Chattanoogans could have seen a more than 25% hike in costs, according to the mayor’s office.
The nearly 20% hike would have also been on top of a 37% increase the company implemented over a decade through a rate rider program, city officials said.
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Commission Chair David Jones signaled the state’s inclinations in a motion filed Friday, suggesting that the board grant a $1 million annual rate increase for Tennessee American rather than the nearly $14 million initially sought by the company. A $14 million increase would have translated to an approximately $4.25 bump in monthly water bills for residents, according to the public utility commission.
Tennessee American Water has said the hike was necessary to support millions of dollars of investments needed to maintain and improve infrastructure. The company’s most recent general rate increase was in June 2012. Meeting increasingly strict water regulations and expanding capacity for growth in the city will require significant new investment, the utility has said.
A spokesperson for the company, Daphne Kirksey, did not immediately respond to a request for comment on the board’s decision Tuesday.
“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,” Kirksey said in an email before the meeting Monday. “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.”
Rate cases like this are subject to certain deadlines under state law. The utility commission had until Feb. 1 to complete its investigation of the petition and announce its ruling, spokesperson Greg Mitchell said in an email.
Tennessee American Water serves 420,000 people in Tennessee and North Georgia and has about 67,000 water meters in the Chattanooga area.
Contact David Floyd at dfloyd@timesfreepress.com or 423-757-6249.