Saturday, October 25, 2014 · 3:45 a.m.
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Tennessee American Water Company said there would be "no sale" of their company, regardless of the mayor's desire to consolidate water, wastewater and water-quality treatment services in the area. (Photo: MGNOnline)

Responding to a proposal by Mayor Ron Littlefield to consolidate the region's water, wastewater and water-quality services, Tennessee American Water Company President Deron Allen said there would be "no sale" of the largest water producer and supplier in the area. 

"We're not for sale," Allen said. "There's no negotiating for a sale when there's not a sale. I think the mayor likes to throw these ideas out there to make people think that's in the works, but we're not interested in selling our company. We haven't been, nor are we going to be."

The mayor's office issued a request for expressions of interest (REI) earlier this month, inviting groups to suggest how they would best oversee integrating a "jigsaw puzzle" of public and private entitles that manage water flow in the region surrounding Chattanooga. In the REI, the mayor's office suggests consolidation would be a necessary step for addressing projected growth in the region, as well as a safety precaution against potential emergency scenarios that would require independent utilities to work with one another. 

In all, the plan would cover a total of 15 municipalities within four counties in two states, representing a total of more than 300,000 residents. At least 16 water and wastewater utilities in Tennessee and Georgia would be included in the proposal were it to take place. 

The REI follows closely on the city's recent entry into a $250 million federal agreement to pay for an extensive overhaul of its outdated sewer system over the next 16 years. Allen said that a portion of Littlefield's motivation for pursuing consolidation was rooted in a misguided approach for dealing with the impending costs of the city's wastewater system repairs. 

"I think it's a lot of deflection," he said. "We're not responsible for the city's wastewater consent decree. I don't see how regionalizing the water system satisfies $250 million of wastewater consent decrees. To me, if they want Tennessee American to fix the wastewater issues, we'd be more than happy to sit down and talk to them. Our company has the financial assets, and we could bring about an expedient compliance for wastewater issues for Chattanooga and Hamilton County."

Richard Beeland, spokesman for Littlefield, said the mayor's office was not surprised by the response from Tennessee American. Beeland said the city would continue to "move forward" with the REI, for which the period for inquiries comes to an end on Sept. 12. 

"We're not surprised by the initial reaction, but we're going to move forward to get the information about consolidation and how it will work," Beeland said. "There has to be a better way to deliver these services in the region than what we're currently doing, so we're going to pursue that and see what they come out with. It won't be a fast process—it will involve a lot of people, and we'll find out later."

Beeland added that there would be "a lot of issues" that would be brought up along the process of discussing consolidation, but none were seen as insurmountable.

Although Nooga.com was not able to reach managers for all the utilities mentioned under the proposal, at least two in addition to Tennessee American said they were unsure of the mayor's plan for consolidation.

Don Stafford, general manager for Eastside Utility, which serves nearly 20,000 customers, said he didn't think the mayor would have ample time to see his proposal through before his term ends next year.

"The city can't take over any of us," Stafford said. "It's going to have to be a joint thing, and I don't think it can happen in six months. I just don't see it happening."

Carolyn Hickman, general manager for Hixson Utility, said the utility, which serves approximately 25,000 customers, was doing well on its own. 

"Personally, I don't know if it would be better for our customers if we consolidated," she said. "I think they're happy with our service."

The proposal also comes as Tennessee American awaits approval from the Tennessee Regulatory Authority on a request for a record 23 percent water rate increase. Allen said the increase was justified because of a combination of infrastructure improvements being carried out by the water company, high taxes paid by the company back into city coffers and low water costs for customers of less than half a penny per gallon—making for an average monthly bill of $19.60. 

Allen added that the mayor's proposal was part of a "personal vendetta" against the water company. Littlefield has not been hesitant in recent weeks to voice his preference for an eventual city takeover of Tennessee American. 

"I think politicians in Chattanooga are used to beating up on the water company to get re-elected," Allen said. "I think that's what the City Council sees. I think it's personal with [Littlefield]. I think he's got a personal vendetta against us, and I think he has a personal issue with private ownership, period. Not just water and wastewater, I think he has a big issue with private ownership—he thinks government is the answer to everything, and obviously, it's not."

Following the closing of the REI, the mayor's office will select a review committee to consider proposals. The REI reads that following the committee's recommendation, the city, "in its sole judgment," will decide if a proposal is viable.

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