Tennessee American Water wants 3.8 percent rate hike to fund upgrades

Tennessee American Water wants 3.8 percent rate hike to fund upgrades

November 8th, 2017 by Dave Flessner in Business Around the Region

Tennessee American Water president Valoria (CQ) Armstrong speaks to guests during a tour of their new $18 million dewatering facility on Monday, Apr. 25, 2016, in Chattanooga, Tenn.

Photo by John Rawlston /Times Free Press.

Chattanooga water rates will increase by 3.83 percent next year if state regulators approve plans by Tennessee American Water to make more than $20 million in capital upgrades to Chattanooga's water system in 2018.

The typical residential water user in Chattanooga would pay an extra 82 cents a month under the proposed capital spending plan, company spokeswoman Daphne Kirksey said.

Tennessee American said Tuesday its capital plans for next year include construction of a new facility for bulk bleach for disinfection, which will replace the use of chlorine gas, and the rehabilitation of an existing sediment basin with more efficient technology. The water utility also plans to install about 16,000 feet, or more than three miles, of new water main lines.

The improvements must by approved by the Tennessee Public Utility Commission, which likely will decide upon the plans within the next few months. State law allows the utility to pass along the costs of any approved capital improvements to ratepayers as a "capital recovery rider" on their monthly water bills.

"Our investments are focused on making sure we continue to deliver safe, clean and reliable water that meet our community's needs," Tennessee American Water President Valoria Armstrong said in a statement Tuesday night. "Our capital plan takes into account our preparedness and resiliency to provide water during significant weather events like the unprecedented natural disasters that have occurred around the country."

The American Society of Civil Engineers estimates Tennessee needs to spend $2.7 billion over the next 20 years on its water infrastructure. In their annual report card, the engineers group gave Tennessee's drinking water systems "C."

Tennessee American is proposing to implement a higher capital recovery rider next year than it did this year, when regulators approved a 3.57 percent increase to pay for about $16 million of capital improvements.

Water rates also could be adjusted in early 2018 by how the operating expenses for Tennessee American compared with the revenues paid by consumers in the past year.

The Tennessee Public Utility Commission separated the capital and operating costs in its rate-making process in 2014 to provide a more streamlined and regular method for adjusted water rates compared with the previous contested, public hearing process used by the former Tennessee Public Service Commission.

Tennessee American Water, a subsidiary of American Water, was started in Chattanooga in 1886 and now provides water to 390,000 persons in Southeast Tennessee and Northwest Georgia.

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