Ten years later, is the city ready for a second try at a takeover?
It seems hard to believe it has been nearly ten years since then-Mayor Jon Kinsey announced plans to take over the Tennessee-American Water Company, enabling the city to maintain its own water system and not be beholden to a private company. Kinsey believed his plan was in the best interest of the citizenry, but public reaction was anything but supportive. Caller after caller to talk radio lamented the plan; hundreds of letters to the local newspapers all joined in the chorus against any attempt to condemn Tennessee-American Water’s property in order to gain control of the company. Eleven months later, after the company sued and sought a public vote on the issue, the city council ended the attempted takeover and agreed to a settlement with Tennessee-American. Thus ended the “Water War To End All Water Wars.”
Or so Chattanoogans thought at the time. A decade later, a new group of elected officials have begun making increasingly bold statements about starting the entire process once again. Along with a new group of political faces is a different Tennessee-American Water Company. Now owned by American Water, the New Jersey-headquartered company is part of a publicly traded corporation listed on the New York Stock Exchange that serves nearly sixteen million people across the country. With the change in ownership has come a more strained relationship with local government, and an increasing sense of suspicion among citizens about the reasoning behind the latest rate-hike requests.
At a recent county commission meeting, Commissioner Warren Mackey went on the record stating that he feels the county and the city should strongly consider looking into another takeover attempt of the water company. The county has already agreed to foot the legal bills for the “Fight The Hike” group that is protesting the proposed rate hike before the Tennessee Regulatory Authority. However, mindful of public response to the last takeover attempt, most local politicians are staying fairly reserved in their public support of any such attempt.
City Councilman Leamon Pierce, for one, plans to sit this one out. “I can’t see myself getting back in that fight again,” he said. “I was in it the first time [but] we didn’t have the support of the public.” County Commissioner Curtis Adams mirrored Pierce’s comments. “That [a takeover] will never happen. We learned that the last time. They have all the money and public relations support. The only way it would happen is if they wanted to sell,” he stated. “Government doesn’t need to be interfering with private business, anyway.”
 Not everyone feels the same way. The Fight The Hike organization has been active in trying to correct what it feels is a pattern of misinformation being promoted by the water company. A common belief is that we have very inexpensive water, but a spokesman for the organization claims that is far from the truth. “According to the state’s Consumer Advocate and Protection Division, our tap water from Tennessee-American Water Company is the most expensive among the state’s six largest cities,” he stated. “Water rates for businesses in Chattanooga are higher than you might have imagined...higher than the rates in Philadelphia, Cincinnati, San Francisco and Reno.” But even it haven’t yet gone as far as calling for a government takeover of the utility. Its fight—for now—is solely against the rate increases.
Tennessee-American does not operate in vacuum. It has to answer to the Tennessee Regulatory Agency, which makes the final decision on rate hikes. It has long been a practice for the water company to request a much higher rate increase than it receives. For example, in May of last year TAWC requested a 19.7 percent hike, but was only granted a 12.3 percent increase. “That’s how the game is played,” explained Commissioner Adams. “It’s like haggling at a yard sale.”
The Fight The Hike people understand this, but counter by pointing out that if the latest request for a 20.58 percent increase is approved, the water utility’s rates will have gone up nearly 45 percent since August 2003. Even if the TRC cuts the increase back as they did last year, it would still be close to a 40 percent increase in the past five years, and the fourth rate increase request in six years. “A filing issued to the TRC by the state’s Advocate and Protection Division said the water company ‘has overstated its need for income in regulated revenue by more than $9.2 million,’ which means that water rates charged to Tennessee-American customers should actually be reduced by $1.6 million,” the group’s spokesman pointed out.
Not that anyone expects water rates to go down anytime soon. A former city official also points out that there is more to your monthly utility bill than meets the eye. The sewer tax is increasing again, as are rates for electricity and natural gas. The former official questions how the city could reasonably expect to run the water company any better than a private company if they can’t even run the Moccasin Bend Sewage Treatment Plant efficiently. “When was the last time you ever heard of government doing a better job running a business than private enterprise? Government can’t run anything efficiently.”
Commissioner Adams says he feels the pain of his constituents. “With all the increases in water, power, sewage, taxes and so forth, people in East Ridge on a fixed income are facing having to come up with two to three hundred dollars more a year. That’s tough. And there’s not a whole lot we can do about that.” Ten years ago, Mayor Kinsey felt the best solution was for the city to take over operation of the water company. Today, a growing number of people feel the same way. The question that is on everyone’s mind—and one that has no definitive answer at present—is whether or not such a move would end up helping or hurting the taxpayer.
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