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Dorothy Rader. supervisor of water quality and environmental compliance for Tennessee American Water, speaks to guests on a tour of their new $18 million dewatering facility on Monday, Apr. 25, 2016, in Chattanooga, Tenn.
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Tennessee American Water invests in dewatering facility upgrade

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Tennessee American Water Co. is pumping more water but sending less sludge to the city's sewage treatment facility.

A new $18 million dewatering system dedicated by the water utility Monday is cutting sludge effluents sent to the Moccasin Bend Sewage Treatment plant by 95 percent, company officials said.

"This is cutting edge," said Susan Story, CEO of American Water Co., the nation's biggest water and wastewater company and the parent company of Tennessee American in Chattanooga. "In our company, we have an R&D group with 20 scientists who are working with communities around the world to make sure that our customers have the best quality water when you need it."

Story said American Water and its subsidiaries don't want to just meet minimum water quality standards.

"We want to set the standards for everybody else," she said. "Last year, American Water Co. standards, on average, were 13 times better than the national average for all water systems, and our goal this year is to be 18 times better than the U.S. average. We're going to do it because of projects like this dewatering facility."

The capital cost of the dewatering facility near Erlanger hospital helped push water rates up by 4.64 percent last year — or an average of a dollar a month for the typical Chattanooga water user. But Tennessee American Water President Valoria Armstrong said the project also helped cut operating costs, even after the new facility added a couple of permanent jobs.

"We pride ourselves on ensuring that we provide safe, clean and affordable water to our customers and to ensure that we are always investing in our infrastructure," she said Monday.

During its 18 months of construction, the project created 200 temporary jobs, officials said.

"This is proof positive that these rate increases are improving the water for our people," Chattanooga City Council Chairman Moses Freeman said. "All of this is for the betterment of our water and the community."

Freeman's comments were in sharp contrast to former Chattanooga mayors Ron Littlefield and Jon Kinsey, who both pushed for the city to acquire the privately held water system after Tennessee American requested repeated rate hikes for system improvements in the 1990s and early 2000s. The Tennessee Regulatory Authority, which must approve all rate increases by Tennessee American, changed the way it reviews water rates and operations three years ago, and the utility is now making smaller, though more frequent, rate increases.

In the current year, Tennessee American got approval for another 4.6 percent increase in rates to pay for other capital projects, including its $8.6 million renovation of a sedimentation basin at the Citico Water Treatment Plant.

Story said American Water is expanding by taking over many troubled public water and wastewater treatment facilities "when we are invited." In Scranton, Pa., for instance, American Water recently agreed to a $195 million purchase of that city's wastewater system, which was under an EPA order to upgrade its treatment through at least a $140 million upgrade.

Investor-owned utilities can often raise capital easier than smaller municipalities, Story said, and American Water enjoys economies of scale as America's biggest water provider, serving more than 1,500 communities.

"We want to be there if we are wanted," said Story, a former Southern Co. executive who grew up about 100 miles south of Chattanooga in Albertville, Ala. "We don't go where we are not wanted. But we are able to do large scale procurement where we can save up to 20 percent on pipes and meters, and we can afford to have a large research and development staff to serve all of our utilities and which can work with EPA and other regulators."

Nationwide, the American Society of Civil Engineers estimates there are more than $3.5 billion in water infrastructure needs, many of them at public water systems where elected officials are more reluctant to raise rates or make costly investments for underground investments not easily seen by taxpayers.

Story said American Water projects its earnings this year will grow 7 to 10 percent per share and about 1 to 2 percent of that growth will come through public acquisitions.

Tennessee American was formed in 1887 — making it one of the oldest businesses in Chattanooga. Its parent, American Water Co., was formed a year earlier and is now the nation's biggest water company with more than $3 billion a year in revenues.

Contact Dave Flessner at dflessner@timesfreepress.com or at 423-757-6340.

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