Before Gov. Bill Haslam and his super-majority Republican Legislature restructured the Tennessee Regulatory Authority to make it more “business friendly” – the mantra of the governor and GOP lawmakers – local governments and business groups like the Chattanooga Manufacturers Association were able to mount collaborative legal challenges against proposals for big rate increases by for-profit utilities. In fact, the practice became nearly routine for the rate-hikes proposed by the Tennessee-American Water Co. and the Chattanooga Gas Co., which frequently sought double-digit rate increases, sometimes above 20 percent.
As a result of legal challenges and the customary intervention of the state Attorney General’s Consumer Advocate Division, such outlandish rate hikes usually got shaved to reasonably modest single-digit amounts. Sometimes they were rejected altogether by the Attorney General’s office.
That isn’t likely to happen very often any more.
Haslam’s recent restructuring of the TRA leadership, along with a follow-on bill changing rate review rules that is now headed for his sign-off, will substantially change the rules, making it easier for utilities to pass along regular rate hikes through what the new TRA bill says are “alternative methods” for rate adjustments.
Among other things, for example, the bill would allow the TRA to approve so-called “trackers.” These would let companies automatically pass on some costs, such as fuel price adjustments and similar market-based costs. Because for-profit utilities, generally monopolies, are legally allowed to make a reasonable profit, it’s likely such adjustments would reflect an automatic profit margin.