Tennessee American Water, a utility company serving approximately 67,000 area customers, intends to raise water rates for Chattanogans while lowering costs for its newest customers in remote areas, according to remarks Chattanooga Mayor Tim Kelly gave to state regulators Monday.
“Our country is in the midst of a cost of living crisis, and we’re feeling it here in Chattanooga,” Kelly said during a public hearing organized the Tennessee Public Utility Commission. “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.”
In May, Tennessee American Water asked the utility commission for permission to raise rates by nearly $5 per month for the average Chattanooga resident. The company serves 420,000 people in Tennessee and North Georgia and has about 67,000 water meters in the Chattanooga area.
(READ MORE: Two Chattanooga area utility companies eye water rate increases)
Tennessee American Water is seeking a 25% rate increase for city residents, Kelly said, which would be on top of annual rate increases the utility has implemented every year for more than 11 years.
Over more than 150 years, Kelly said, the parents, grandparents and great-grandparents of families in St. Elmo, single mothers in Highland Park and retirees in East Chattanooga have paid for Tennessee American Water’s infrastructure through their monthly water bills. Without that infrastructure, Tennessee American Water would be unable to deliver a single drop of water to customers in Sale Creek or on the top of Lookout Mountain, he said.
“Now, Tennessee American wants to reward Chattanooga residential customers for generations of infrastructure investment by raising their rates by more than 25% in order to offer lower rates to Tennessee American’s newest customers,” Kelly said. “That ain’t right.”
Tennessee American Water would cut water bills for residents in Suck Creek by more than 30% and for residents of multi-million dollar homes in Jasper Highlands by nearly 29%, Kelly said.
“As the mayor of Chattanooga, I can’t stand by and let it happen without protest,” Kelly said. “It makes no sense, and Tennessee American Water can’t justify it.”
The city’s attorneys asked the company to provide records proving the cost of serving those new remote areas and justifying lowering those residents’ rates while raising costs for Chattanoogans, Kelly said. Tennessee American Water said it didn’t have those kinds of records.
A spokesperson for the company, Daphne Kirksey, said in an email the company keeps records on cost of service and capital investment information, which they provided to the Tennessee Public Utility Commission.
The rate hike would also affect the city’s budget, Kelly said. Chattanooga is the only major city in Tennessee that depends on a private company for its critical water services, including at community centers, offices, parks and wastewater treatment facilities.
The Moccasin Bend Environmental Campus alone pays more than $515,000 for water under current rates. Tennessee American Water’s requested rate increase would cost taxpayers nearly $100,000 in the first year, Kelly said, just for the work the city does to treat wastewater.
Kirksey said the utility company’s request is driven by $173 million in water system improvements it has made since the last general rate increase in 2012 and through December 2025. The rate hike will help the company provide clean, safe and reliable service, she said.
“The request reinforces our commitment to investing in the water system to replace aging infrastructure, provide reliable service/fire protection, enhance water quality, and comply with environmental regulations,” she said in an email.
The company has said it expects a ruling from the state’s public utility commission on its request sometime in the first quarter of 2025.
Contact David Floyd at dfloyd@timesfreepress.com or 423-757-6249.
Staff photo by Matt Hamilton / Commissioner David Crowell, center, and attorney Monica Smith-Ashford, right, listen as Chattanooga Mayor Tim Kelly speaks during a public hearing by the Tennessee Public Utility Commission at the Chattanooga Convention Center on Monday, Oct. 28, 2024.