by Judy Frank
posted August 19, 2008
The 12.20 percent increase that the Tennessee Regulatory Authority already approved for Tennessee-American Water Company was not justified – much less the additional 20.58 percent increase that TAWC is seeking now, Mayor Ron Littlefield told TRA directors Tuesday morning.
Chattanooga is appealing the previous increase, and also has intervened in opposition to the additional increase TAWC is seeking.
Mayor Littlefield was the first person to speak during a public hearing that began at 8:30 a.m. in Hamilton County Courthouse.
After it concluded, TRA directors continued hearing testimony in its probe into whether an additional increase is justified and, if so, how large the increase should be.
The regulatory hearing, which is open to the public, is expected to continue most of this week.
The previous 12.20 rate increase grew out of a 2006 request by the water company that it be allowed an increase of almost 20 percent.
The city opposed the increase, primarily on the grounds that administrative fees which Tennessee-American pays to its parent firm, American Water Works Company, are excessive.
Management fees sought by TAWC in the 2006 rate filing had more than tripled since 1996, from about $1,300,000 to more than $4,064,000, city attorneys noted.
In May 2007 TRA directors decided to permit Tennessee-American to increase its rates by $4,079,865, or 12.20 percent.
However, the formal order granting the rate increase was not entered until June 2008 – nearly three months after Tennessee-American filed the current rate case seeking an increase of another 20.58 percent.
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