The average Chattanooga household will pay another $1 a month for water under a rate increase approved Tuesday for the Tennessee American Water Co.
The Tennessee Regulatory Authority approved a 4.64 percent increase in water rates for the Chattanooga water utility, or more than 80 percent of the 5.6 percent Tennessee American requested when it filed for the rate increase last year.
Tennessee American officials said the rate hike — less than half the 12 percent increase granted when the utility last increased rates in 2012 — is needed to pay for replacing aging pipes, meeting stricter EPA water requirements and supporting local economic projects that extend water services for new business development.
The extra fee will appear as a surcharge, called a "Capital Recovery Rider," on customers' bills starting today.
"Our customers play an important role because each time they make a water payment, they help to make critical improvements to our water system," Tennessee American Water President Deron Allen said in a statement. "We plan these projects based on greatest need, balanced by the price our customers pay. We are also very careful to manage our costs by operating as efficiently as possible."
The utility's 2015 infrastructure capital projects total more than $17.5 million.
Historically, general rate cases filed by Tennessee American have sought double-digit rate increases and have often been severely cut by the TRA. The latest rate increase is the first under a new rate-setting process adopted by the Tennessee Legislature and the TRA last year to expedite and improve utility rate making.
Daphne Kirksey, external affairs manager for Tennessee American, said water utilities need to invest more capital in pipes, treatment systems and other infrastructure to ensure adequate supplies and quality of water. The American Society of Civil Engineers estimates there are $3.5 billion in needs over the next 20 years to renew and replace water infrastructure in Tennessee.
Tennessee American has about 81,000 connections, which serve 370,000 people, in Chattanooga, Lookout Mountain, Red Bank, East Ridge and parts of Northwest Georgia, including Rossville and Lookout Mountain.
Tennessee American Water is a subsidiary of the New Jersey-based American Water Co.
Contact Dave Flessner at firstname.lastname@example.org or at 757-6340.