By DAVE FLESSNER
Oct. 17, 2000 (Knight Ridder/Tribune) —Chattanooga's water utility is offering to cut its rates by 30 percent for major water users that locate or expand in its service territory.
Tennessee American Water Co., which currently sells only about half of the water it can distribute, asked state regulators Monday to adopt a new economic development tariff to stimulate new business in Chattanooga. Under the proposed new rate, businesses which use more than 5 1/2 million gallons of water annually and create at least 150 new jobs would pay 30 percent less than other customers for water.
"This will not affect what any existing customer pays for water," said Bill L'Ecuyer, president of Tennessee-American. If anything, Mr. L'Ecuyer said the new rate should boost overall business and help spread the utility's costs over more customers. "It's a win for consumers, a win for business and a win for the community."
City officials, who fought unsuccessfully last year to take over Tennessee-American, welcomed the move and lauded the utility.
"It's a truly innovative approach and gives us another important tool in our toolbox to bring new business to town," Mayor Jon Kinsey said.
Tennessee-American pledged a year ago to expand its economic development efforts when the city agreed to end its takeover attempt of the utility. The water company cut its fire hydrant fees to the city and pledged $100,000 a year in money and in-kind services to local schools.
"Our goal is to be a good partner for economic development in our community," Mr. L'Ecuyer said.
A year ago, Mayor Kinsey had wanted to buy the water utility to cut rates and provide more incentives to new industry.
While nearby Atlanta struggles to find enough water supplies, Chattanooga has plenty. Tennessee-American, which draws water from the Tennessee River, has a capacity of more than 65 million gallons of water a day. The utility typically sells just more than 30 million gallons of water each day.
"Tennessee-American's tariff will be an important incentive we can offer companies who are looking at expanding or locating in our region," said Bill Sudderth, chairman of the Chattanooga Area Chamber of Commerce and a board member for Tennessee-American.
The Tennessee Regulatory Authority, the state agency that regulates water rates, must still approve the special rate. But regulators have adopted similar incentives for gas and electric utilities trying to attract new customers.
To qualify for the reduced rates, existing or new companies must meet two criteria:
—The business must create at least 150 jobs.
—The business must use at least 5 1/2 million gallons of water a year, or about one half of 1 percent of the utility's total sales.
"We should take this up in the next 30 days or so," said David Waddell, executive director for the TRA.
State officials signaled their support for the special rate on Monday.
"This is another piece to the puzzle here in Chattanooga," said Bill Baxter, commissioner for the state Department of Economic and Community Development. "From the state's standpoint, this is great."
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© 2000, Chattanooga Times/Free Press, Tenn. Distributed by Knight Ridder/Tribune Business News.
