Tennessee AG Reaches Proposed Agreement With Tennessee American Water Regarding 12.72% Rate Hike

Tuesday, October 2, 2012

The Tennessee Attorney General’s Consumer Advocate and Protection Division announced that it has reached a proposed agreement with the Tennessee American Water Company (TAWC) on a rate increase request. 

The proposed agreement, subject to approval by the Tennessee Regulatory Authority (TRA) at its next meeting on Oct. 15, means classes of customers will pay 12.72 percent more for water instead of an increase of up to 35 percent if all of the company’s proposed rate increases and adjustments were approved, officials said.

The proposed settlement has been agreed to and been signed by representatives of the city of Chattanooga, the Chattanooga Regional Manufacturers Association, Walden’s Ridge Utility District, and the Town of Signal Mountain.

TAWC’s requested rate hike is the utility’s sixth requested increase in the past nine years and the highest proposed to date.

Numerous consumers complained about the rate hike during a public hearing held Sept. 20 in Chattanooga. The AG Office filed testimony of numerous experts supporting the need for no more than $2.8 million rate increase for Chattanooga area residents based on information available at the time of filing. TAWC, a monopoly, has about 74,500 customers in Chattanooga and Hamilton County and surrounding areas. The settlement authorizes a rate increase of $5.2 million of the $10.6 million sought by TAWC. The Company has also agreed to drop several rate adjustment proposals which could have increased rates an additional 10%.

“We feel this is an appropriate settlement for consumers while giving TAWC an acceptable rate of return,” Attorney General Bob Cooper said.

Deron Allen, water company president, said, "We are pleased that all parties in the case were able to work very hard towards a proposed agreed resolution of the matter, and we look forward to the TRA's consideration of it."

A separate hearing on the merits of the case was scheduled for Oct. 15, but may not occur if the TRA accepts the agreement.

Over the past nine years, the TRA has granted six rate increases to the TAWC. The last rate increase resulted in new rates effective April 2010. The Attorney General has intervened in each of the five previous cases as have the city of Chattanooga and the Chattanooga Regional Manufacturers Association.

For more information on this case, see filings at the TRA website athttp://www.state.tn.us/tra/dockets/1200049.htm.

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