Instead, officials spent Wednesday preparing their request to intervene in Tennessee American’s June 1 request for state permission to almost double rates for high volume water users such as Alexian Village located in the town.
The proposed rate increase would raise prices 13 percent for Signal Mountain consumers who use up to 45,000 CCF of water per month.
One CCF equals 100 cubic feet, or 748 gallons, according to EPA and other government sources.
But Alexian and other customers that consume more than 45,000 CCF would see their rates jump by 93 percent, according to Signal Mayor Bill Lusk as well as information provided to regulators by the water company.
Vince Butler, spokesman for the water company, said, "Today, Sale For Resale customers pay $1.03 per CCF regardless of how much water they purchase from Tennessee American Water.
"The actual proposed increase for our Sale for Resale customers is 13 percent.
"Tennessee American Water has proposed a two-tier rate for Sale For Resale customers, which must be approved by the TRA before it's even implemented (if approved, the rate change will like be implemented around January 2013).
"The proposed rate will apply to all Sale for Resale customers, meaning they will pay a proposed rate of $1.15 per CCF when purchasing less than 45,000 CCF per month and a proposed rate of $2.00 per CCF when purchasing more than 45,000 CCF per month."
Concerning a possible 93 percent rate increase, he said, "Apparently, this number was reached by calculating the current rate of $1.03 to the proposed $2 rate for customers using more than 45,000 CCF per month. This is not accurate since the calculation makes the assumption that the Sale For Resale customer will purchase more than 45,000 CCF per month for every month of the year. Historically, the total water usage per month for the town of Signal Mountain has not exceed the 45,000 CCF per month threshold.
"The only exception is when the town has purchased a higher amount of water in order to meet their customer demand during the summer months (June, July and August).
"Again, the $2 rate will only apply when a Sale For Resale customer purchases more than 45,000 CCF of water in a month from Tennessee American Water.
"If the Sale For Resale customers purchases less than 45,000 CCD of water in a month, the customer will pay the lower proposed rate of $1.15.
"Alexian Village is not a Tennessee American Water customer. There is no way for the water company to verify the water usage for individual residents or businesses on Signal Mountain since we do not read the meters.
"Our customer is the town of Signal Mountain, which buys water from Tennessee American Water and then delivers it to local residents and businesses.
"The water rates on Signal Mountain are set by the town of Signal Mountain -- not Tennessee American Water or the Tennessee Regulatory Authority.
"The town of Signal Mountain is the one who reads the water meter and bills local residents and businesses for their water service -- not Tennessee American Water.
"Water rates for Sale For Resale customers are historically based on the costs to purchase water from someone and to maintain the infrastructure needed to deliver the water to residential homes and businesses.
"The town of Signal Mountain will have to speak to what impact our rate request will have to residents and businesses on Signal Mountain."
TAW did not bother to notify the town of the proposed increases, Mayor Lusk said, but did send a representative on Monday to meet with him and town manager Honna Rogers after they learned of the request from other sources.
Attempts to reach Tennessee American representatives were unsuccessful since the water company was closed for the Fourth of July.
But Gary M. Verdouw, director of rates for Tennessee-American and other subsidiaries of the American Water Works Company Inc., told state regulators on July 6 that Signal is one of four communities that, together, present TAW with “significant business risk.”
These four Sale for Resale communities, he testified, buy water from TAW and then resell it to their respective residents. In addition to Signal, he said, they include Walden’s Ridge Utility District, Fort Oglethorpe and Catoosa County.
“Tennessee American has significant business risk due to a concentration of sales in (the Sale for Resale customers),” Mr. Verdouw testified noting that, together, the four communities purchased $1,531,878 of water in 2011, representing 3.7 percent of TAW’s water sales.
“The town of Signal Mountain purchased $405,136 of water . . . (and) WRUD purchased $493,773 of water,” he told regulators. “This is not an aberration, but is very much consistent with their respective historical purchases. They are significant customers.”
However, Mr. Verdouw continued, TAW is in danger of losing the business of one or both of these two customers.
“Tennessee American received a letter on Sept. 30, 2011, notifying the company of WRUD’s intent to terminate its 40-year purchases agreement at an unspecified future date in order to either purchase water from Hixson Utility District or to re-start their water treatment plant,” his testimony indicated.
“Signal Mountain continues to purchase water from Tennessee American but their purchase agreement expired on Dec. 31, 2010, and they have not yet re-signed,” it continued. “Signal Mountain has expressed its concern to the company that the 2010 rate order imputed the same increase on their special contract rate as on everyone else, even though they own the pump station at the base of Signal Mountain and bear their own electrical pumping expense.”
Further, Mr. Verdouw noted, “(Tennessee American) understands that cross connections have been established between the Signal Mountain and Walden’s Ridge systems which creates the potential for Signal Mountain to purchase water from WRUD, rather than Tennessee American) if WRUD terminates its contract with (TAW).”
Mayor Lusk, contacted at his home, said he was not aware that Walden plans to end its contract with Tennessee American.
He confirmed that there have been discussions between Signal Mountain and Walden about connecting their respective water systems to help ensure that neither is ever left completely without water. For example, he said, if that line were installed and the pump that provides Walden with water was temporarily out of service, WRUD could obtain water from Signal Mountain for the duration of the emergency.
However, he stressed, no such line currently exists and there are no plans to install one at this time.