Water Company Coddles Some Customers, Soaks Others, Signal Mountain Mayor Says

Lusk Asks Regulators To Deny Requested Double-Digit Increase, End Long-Term Inequities

Friday, September 21, 2012 - by Judy Frank

While members of the Tennessee Regulatory Agency are deciding whether to approve yet another increase in water rates, Signal Mountain Mayor Bill Lusk said Thursday, they should also look at ways to put a stop to the water company's practice of playing favorites among its customers.

The unfair practices have been going on for years, he said, and Signal Mountain has been -- and would continue to be if the proposed increase is approved -- among the victims.

Under Tennessee American Water Company's proposed increase, he said, four area communities which buy water in bulk and then resell it would all be charged the same rates, regardless of the cost to TAWC to provide the service.

Signal Mountain and its neighboring town, Walden, are both bulk customers, he noted. However, the services they are provided are vastly different.

In Walden's case, Tennessee American pumps water to Walden's Ridge Utility District on the top of the mountain, the mayor explained.

However, TAWC transports water purchased by Signal Mountain only as far as the town's pump station at the foot of the mountain, he said, leaving the town to bear the cost of getting the water up the mountain.

"Since 1969, the Town has invested over $975,000 in capital improvements and we have several large expenditures forecasted for replacing several of our five pumps," the mayor said. ". . . In recent years, the town requested that Tennessee American sell us water delivered to our tanks on the mountain just as it does for WRUD. This would have put both utilities on equal footing, but TAWC was unwilling to consider this at the time."

Consequently, he said, "For FY 2013, the Town budgeted $291,957 on operating expenses that are solely dedicated to pumping water up the mountain. None of these expenses are borne by the other water utility on Signal Mountain and, in fact, Tennessee American provides these services to that utility included in their rate."

Now, adding insult to injury, TAWC is asking for permission to levy a two-tiered rate increase that, if approved, would mean a whopping 43.9 percent increase in Signal's cost to provide water to its residents since 2009, Mayor Lusk said.

"In the past, TAWC was willing to negotiate a rate with the town," he noted, "but this stopped when the TRA assumed rate-making responsibility for bulk customers."

Further, he said, "When we received a 12.77 percent increase in 2009, Tennessee American would only allow their proposed contract with the Town to state that TRA could change the rate at any point . . . This served to void any actual agreement on rates since it could now be changed during the term of the contract, making a continuing agreement with Tennessee American pointless, while limiting our ability to purchase water from another supplier."

"The Town of Signal Mountain requests that the TRA reject this latest increase from Tennessee America Water Company in its entirety," he concluded. "But if an increase is granted, the Town should be given a credit on any increase that is equal to our pumping, maintenance and capital costs and the two-tiered rate should be rejected."

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