State Attorney General Says Water Company Rate Increase Request Excessive; Hearing Held At Hamilton County Courthouse

Thursday, September 20, 2012

The Consumer Advocate with the Tennessee Attorney General’s Office says Tennessee American Water Company's rate increase is far more than is necessary.

The consumer office has pre-filed testimony "of numerous experts supporting the need for no more than a $2.8 million rate increase for Chattanooga area residents based on information available at the time of filing." The requested rate hike of $10.6 million is the sixth requested in the past nine years.

Members of the Tennessee Regulatory Agency held a  hearing at the Hamilton County Courthouse on Wednesday.

Signal Mountain Mayor Bill Lusk was among those speaking at the hearing, noting there is a $300,000 expense in pumping water to the top of the mountain. His town and Walden have intervened along with Chattanooga and the Chattanooga Manufacturers Association.

Mayor Ron Littlefield was present at the hearing, but did not speak. City Attorney Mike McMahan said the city will make its presentation at a later hearing. The TRA must make a decision by December.

Businessman Jim Folkner rapped the rate increase, saying the water company request "should be denied in its entirety."

He said, "This is a monopoly. They come here from somewhere else, use our water for free, and take as much of our money home as they can."

He said Tennessee American "is not a good corporate citizen." He said the firm is refusing to any longer include sewer charges on its water bills, causing local governments sizable new expenses.

Rep. JoAnne Favors took no position, but Rep. Richard Floyd said the increase was not justified.

TAWC has about 74,500 customers in Chattanooga and Hamilton County. It also has customers in Cleveland and Bradley County.

TAWC released the following statement: "Ongoing investments to renew and replace water treatment facilities, pumps and pipelines are one of the primary drivers for the rate request. This filing covers approximately $25 million in local water infrastructure investments that the water company has either made or plans to make during the next 18 months. 

"These investments are critical to what we do every day in delivering high-quality and reliable water service to our customers at an exceptional value -- a cost that remains less than a half-penny per gallon." 

The Attorney General’s Office typically represents consumers’ interests in matters involving telecommunications, energy, sewer, and water rate-making and regulation issues that are presented to the TRA for review, it was stated.

“My office is concerned that the Chattanooga area residents will have higher water rates than other major Tennessee cities if the TRA approves this latest hike TAWC has proposed,” Attorney General Bob Cooper said. “We will urge the TRA to reject this proposed rate increase as disproportionate in relation to the company’s ability to make a fair profit.”

A separate hearing on the merits of the case is scheduled for Oct. 15 and is expected to last most of the week at a location to be determined later.

Over the past nine years, the TRA granted rate increases to the TWAC totaling 32.7 percent for consumers. 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 Manufacturers Association.

For more information on this case, please see filings at the TRA website at

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