The Consumer Advocate of the state Attorney General's Office has filed a complaint against the Jasper Highlands development on Jasper Mountain, saying the group is operating a water system without obtaining a state certificate.
It says Jasper Highlands (Thunder Air) is refusing to pay an annual inspection fee or tariff in relation to the water system.
The complaint asks the Tennessee Public Utility Commission to convene a show cause session in regard to the charges.
The complaint says the development, which is owned by John "Thunder" Thornton of Chattanooga, is charging water rates not approved by the commission.
It says the company is withholding service from some residents in violation of state law.
The firm owns some 9,000 acres atop the mountain and a number of homes have been built at the site. The development is ongoing.
The complaint says all owners are required to connect to the Jasper Highlands water system even if there is a well available.
Jasper Highlands maintains that it is exempt from regulation due to involvement of a homeowner's association. The complaint says Jasper Highlands has full control of appointments to the homeowner's association, and Dane Bradshaw, president of Jasper Highlands, is also president of the homeowner's association.
It says Thunder Air gets its water from South Pittsburg, but it receives 100 percent of the meter fees and 15 percent of the total billing to owners.
The complaint says Robert Schlenkert, who is building a house at Jasper Highlands, paid a hook-up fee of $2,150, but has been denied water and is having to cart in his own supply.
Mr. Schlenkert said he believes the developer is "price gouging" for water. He said the out-of-town cost for South Pittsburg water is $25.77, but Jasper Highlands is charging $105.41 - "over four times the price."
Lawyers for Jasper Highlands said actions by the Schlenkerts cost residents legal fees and their water will be turned on as soon as they make certain reimbursements to Jasper Highlands.