City of Chattanooga Appeals Water Rate Increase

2008-08-13 23:49:02 -

- The City of Chattanooga has appealed the Tennessee Regulatory Authority (TRA) decision granting a 12.20 percent increase to Tennessee-American Water Company in the 2006 rate case filed by Tennessee-American. The rate increase, which was put into effect May 2007, increased water rates by $4,079,865.

"The City of Chattanooga has great respect for the TRA, but believes that the

Authority did not correctly apply the provisions of Tennessee law that place the burden on Tennessee-American to prove that it is prudently managing its system and that the costs it seeks to pass on to ratepayers are just and reasonable," stated Mike McMahan, Chattanooga Assistant City Attorney.

The City of Chattanooga intervened in the 2006 Tennessee-American rate case to oppose Tennessee-American's request for an increase of over 19.67 percent. The City's opposition focused on the large increases in administrative fees that Tennessee-American pays to its parent, American Water Works Company, and to other related companies. The City pointed out that the management fees sought by Tennessee-American had more than tripled since 1996, from some $1,300,000 to more than $4,064,000, in Tennessee-American's 2006 rate filing.

Regarding the 2006 case, the TRA decided in May 2007 to permit Tennessee-American to increase its rates by $4,079,865, or 12.20 percent. The formal order granting the rate increase was not entered until June 2008, nearly three months after Tennessee-American filed another rate case seeking an increase of another 20.58 percent. Under Tennessee law, parties to the 2006 case had 60 days from the entry of the final order in a rate case to file an appeal. The City's appeal was filed within that time period.

Fight the Hike--endorsed by Chattanooga Mayor Ron Littlefield, Hamilton County Mayor Claude Ramsey, Chattanooga area chapters of the Urban League and NAACP, the Chattanooga Manufacturer's Association, RiverCity Company and the Chattanooga Association of Realtors--is a coalition of citizens and businesses vowing to fight the 20.58 percent water rate hike proposal.

"Chattanooga already has the most expensive water rates out of Tennessee's six largest cities," said Chattanooga businessman Randy Baker, chair of the Fight the Hike campaign. "We cannot tolerate increases like this when the average family is struggling to make ends meet. Plus, this could have a negative impact on business recruitment in Chattanooga."

For information about Fight the Hike, visit www.FighttheHike.org.

for The City of Chattanooga
Albert Waterhouse, 423-309-1250