Today, the Tennessee Regulatory Authority (TRA) approved a settlement that allows Tennessee American Water to adjust rates in the company’s Chattanooga, Lookout Mountain, Lakeview, Suck Creek and Lone Oak service areas, effective Nov. 1, 2012. Tennessee American Water’s ongoing investments to maintain and enhance the pipes, pumps and hydrants needed to deliver reliable water service was the primary driver for the rate request. The settlement agreement covers approximately $25 million in local water infrastructure investments. “We believe this settlement strikes a fair and equitable balance between the interests of our customers and the company’s need to recover costs associated with ongoing maintenance and enhancements of local water infrastructure,” said Deron Allen, president of Tennessee American Water. “We commend all parties who worked very hard with us to resolve this case.” The cost for water service remains less than a penny per gallon for residential and commercial customers served by Tennessee American Water. In Chattanooga, the monthly water bill for an average residential customer (4,153 gallons per month) will be around $21.58 per month. Many communities across the country are facing the challenges of aging water and wastewater infrastructure and associated rate increases. The United States EPA says the nation’s water utilities will need to make more than $355 billion in infrastructure investments over the next 20 years to replace thousands of miles of pipe and for upgrades to treatment plants, storage tanks and other assets to ensure public health. According to the American Society of Civil Engineers, Tennessee’s (entire state) drinking water infrastructure needs an investment of $2.77 billion over the next 20 years. The settlement was agreed upon by Tennessee American Water, the Tennessee Attorney General, City of Chattanooga, Chattanooga Regional Manufacturers Association and other parties and approves an annual revenue increase of $5.2 million. The settlement agreement was filed with the TRA on October 1, 2012. The rate case was filed by Tennessee American Water on June 1, 2012.
Under the terms of the settlement, water rates for a typical residential customer who uses 4,153 gallons of drinking water per month would:
- Increase in the Chattanooga service area by $2.38 per month, or about 8 cents per day, to $21.58 per month.
- Increase in the Lookout Mountain service area by $3.16 per month, or about 10 cents per day, to $28.08 per month.
- Increase in the Lakeview service area by $2.75 per month, or about 9 cents per day, to $24.85 per month.
- Increase in the Suck Creek service area by $5.14 per month, or about 17 cents per day, to $46.72 per month.
- Increase in the Lone Oak service area by $6.24 per month, or about 21 cents per day, to $57.68 per month.