John Watson

Chattanooga utility costs have increased faster than inflation over a five-year period, data show, at a time when many consumers are also trying to cope with record fuel prices.

According to the Bureau of Labor Statistics, inflation since 2003 has totaled 16.05 percent. Chattanooga electricity rates have risen nearly 31 percent over the last five years, or almost twice as fast as the general inflation rate during the period.

Harrison resident Kaye Langston said that since she and her family bought a house two years ago, their monthly electric bills have varied from $150 to $289. The family is feeling a pinch combined with water rates and rising fuel prices, she said.

“With the weather being cool, I don’t turn the air on,” Mrs. Langston said. “I open the windows. When it starts getting warm, we’ll dress appropriately with shorts and T-shirts.”

Staff File Photo by Kelly Wegel -- Dillard Smith Construction Co. employees Cory Wade, left, and Grant Barker prepare to pull EPB’s new fiber-optic cable across the Tennessee River to upgrade the electric system. Chattanooga electricity prices have risen nearly 31 percent in five years.

The Tennessee Valley Authority has made at least six adjustments to its rates, including fuel surcharges, since 2003. The most recent increase was nearly 12 percent on April 1. Last July EPB raised its rates by 4 percent.

The July increase was EPB’s first in 10 years, said David Wade, the utility’s senior vice president of the electric system. EPB made its operations more efficient during those 10 years, he said, to prevent raising rates as long as possible. For every dollar an EPB customer spends, Mr. Wade said, 82 cents goes back to TVA for electricity generation.

Electricity isn’t the only commodity that has given consumers sticker shock over the past five years. Chattanooga Gas Co. customers are paying about 20.6 percent more now than five years ago, data show.

About 75 percent of a customer’s bill covers the cost of natural gas, said Jack Holt, a spokesman for AGL Resources, which owns Chattanooga Gas. The remainder of a bill covers distribution and company operations.

Chattanooga Gas must receive approval from state regulators before raising its rates. The company increased the administrative portion of its bills by 2 percent in December 2004 and 2.5 percent in 2007. The natural gas portion of bills increased 30 percent in 2005, newspaper records show, and 5 percent last winter, Mr. Holt said.

“Chattanooga Gas makes no profit on the natural gas it purchases on behalf of customers,” Mr. Holt said. “It must purchase the natural gas at the current market price and pass the cost of the gas along to its customers without a profit.”

Consumers also are paying higher costs for water.

Tennessee-American Water Co. rates have increased 16.9 percent in the past five years.

The utility recently requested a 20.58 percent rate increase, and state regulators have until mid-September to rule on the request.

The average residential water bill in summer 2003 increased $2.51, said Davis Lundy, a spokesman for Tennessee-American. The average bill increased 62 cents in March 2005 and $1.83 in May 2007, newspaper archives show. Most of the 2005 rate increase was granted to offset a reduction in city fire hydrant fees ordered by the Tennessee General Assembly, Mr. Lundy said.

Water utilities have the highest capital costs of any utility, said John Watson, president of Tennessee-American. Water utilities typically spend $3 in capital investments to make $1 in revenue, he said. From 2003 to 2007, Tennessee-American has spent $60 million to replace items like mains and hydrants, add new water storage tanks and improve drinking water quality, he said.

Many Tennessee-American customers pay municipal sewer, wastewater and garbage collection fees which are tacked onto their water bills by government agencies, Mr. Watson said. In those cases the water company passes those fees on to the municipal governments. And, wastewater bills increased in April, he said, which is outside of his company’s control.