Water Company Files For Additional Revenue Under New Section Of State Law

Friday, October 4, 2013

Tennessee American Water on Friday filed a request with the Tennessee Regulatory Authority (TRA) for three riders and an expense tracker that, if approved,  collectively covers approximately $7.5 million in local water infrastructure improvements that the company has made or will make in 2014. 


Officials said, "Today’s filing is the first of its kind by Tennessee American Water. According to company officials, today’s filing is the implementation of new state legislation passed by the Tennessee General Assembly. The new law encourages the TRA to consider alternative rate mechanisms to ensure continued reliability and quality of service, as well as to promote local economic development."

 According to Deron Allen, president, Tennessee American Water, similar alternative rate mechanisms have been used in other states to encourage ongoing infrastructure replacement (pipes, pumps, hydrants, etc) at necessary levels while holding down the overall costs for the filing and administration of general rate cases with state commissions. 

“We’re proud of the reliability and quality of the water system serving Chattanooga and local communities,” said Mr. Allen. “Our goal is to keep the water system strong and viable today and for generations to come. Ignoring the infrastructure needs of our water system, over time, would be a dis-service to our customers and community.”

He said, "Communities across the country are facing challenges of operating aging water infrastructure and the need to increase rates to fund critical improvements.  According to the American Society of Civil Engineers 2013 Report Card, communities throughout Tennessee collectively will need to spend approximately $3.5 billion during the next 20 years to renew and replace their water infrastructure needs."

He said the goal of the filing for new riders and an expense tracker "is to allow Tennessee American Water to continue making necessary investments in the local water system’s infrastructure with minimal impact to customers’ rates. The average total impact for a residential customer in Chattanooga, as proposed, would be approximately 24 cents per month for all three riders and expense tracker combined, or less than $3 per year total. If approved by the TRA, the cost for local drinking water service will remain less than a penny per gallon. The average monthly bill for a residential customer in Chattanooga today is $21.56 (based on 4.154 gallons used per month)."

The filing, if approved, would add a surcharge to all Tennessee American Water customers that would be trued up annually and reset to zero after the next general rate case order.   All changes in rates and costs for Tennessee American Water must be determined by the TRA.  This request will be closely reviewed and scrutinized in an open, transparent process by the TRA.  the Consumer Advocate and others before a decision on the proposed surcharge is made.

A look at components of today’s filing:


·         The Qualified Infrastructure Improvement Program Rider is an incremental surcharge to a customer’s bill to cover the replacement of replacement of water mains, fire hydrants, water meters, production plant structures and equipment, etc. 

·         The Economic Development Investment Rider is an incremental surcharge to a customer’s bill to cover the capital investment and operational expenses related specifically to economic development.  Examples include water main construction to new development areas or projects that may add jobs to the area.


·         The Safety and Environmental Compliance Rider is an incremental surcharge to a customer’s bill to cover the capital investment and operational expenses related specifically to safety and environmental compliance.  . 


·         The Purchased Power, Chemical, Purchased Water, Waste Disposal and TRA Inspection Fee tracker allows these expenses to be trued up for increases or decreases within a given year.  The current filing has no increase, and will be trued up in January 2014.


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