NASHVILLE -- State regulators voted Monday to hold their hearing on Tennessee American Water's proposed 28 percent rate increase in Chattanooga.
"While there will be significant expenses to the authority, the interests of the consumers outweigh the potential costs," Tennessee Regulatory Authority Chairman Mary Freeman said as she and colleagues Eddie Roberson and Sara Kyle voted 3-0 to move the hearing from Nashville to Chattanooga.
Freeman said she weighed arguments from Tennessee American as well as opponents of the increase including Chattanooga, Chattanooga Regional Manufacturing Association, the Tennessee Attorney General's Consumer Advocate and Protection Division and Utility Workers Union of American Local 121.
A top consideration, she said was a letter from Hamilton County's legislative delegation, led by Sen. Bo Watson, R-Hixson, which urged all proceedings be held in Chattanooga. The Hamilton County Commission also requested the hearing be held locally.
As a result of directors' action, the agency will conduct both a public or "service" hearing and evidentiary proceedings in Chattanooga instead of at the TRA's Nashville headquarters. At a later status conference on the case, Freeman tentatively set the week of Feb. 28 for the hearing. The TRA must decide the matter by March 17.
Earlier, the water company's attorney, Dale Grimes, said Tennessee American officials believe it is "very important" to hold the public comment portion of the proceedings in Chattanooga to allow residential and business users to discuss service.
But noting the evidentiary hearing is a "multiday affair" Grimes said "requires not only travel to Chattanooga, but it requires lodging, it requires meals out of town. In our case, I'll just say, it requires us to move an office to Chattanooga so we can do all the things we need to do ... to meet the challenge of six interveners."
The city's attorney, Mike McMahan, said officials believe "there's very strong community support to have the TRA come to Chattanooga to hear this case. It is important to the community."
In the public hearing portion, residential and business users as well as others can weigh in on the increase. During the evidentiary hearing, experts and attorneys for the water utility and opponents of the increase make their arguments about the increase.
The utility is seeking nearly $9.4 million in higher rates but Attorney General Bob Cooper says only $589,000 -- less than 2 percent -- is needed to grant the for-profit company's shareholders a fair rate of return. Tennessee American is owned by American Water Works Co.
Tim Spires, president of the Chattanooga Regional Manufacturers Association, praised the TRA's ruling, calling it "good news that the people and businesses most affected by this case will be able to hear this case in their own city."
Tennessee American spokeswoman Kim Dalton said company officials "respect the decision of the directors, but we are disappointed just because we were trying to hold the costs down for the consumers, which are our customers."
The TRA in 2008 held in Chattanooga the first week of what turned out to be a two-week hearing. The second week was moved to Nashville. According to Freeman's office, the cost to the state was about $8,800.