Raftelis Estimates $107 Million Savings to Cattanooga from Re-Privatization

CHATTANOOGA, Tenn. (BUSINESS WIRE) - A nationally recognized expert reported today to the Chattanooga City Council that local citizens would save nearly $107 million dollars over the next 10 years if the city acquires the privately owned water system, which serves most of the City, and then has the system operated under contract. The expert, Mr. George Raftelis of Raftelis Financial Consultants, also provided a valuation estimate of $85.7 million for the water system. This valuation, was qualified by the assumptions that the system is in top condition and has a valid franchise.

Chattanooga's water system is currently owned by Tennessee-American Water Company, a subsidiary of American Water Works (AWK). Mr. Raftelis explained that the cost savings estimates are conservative and could be substantially greater. For example, he did not factor any savings from the City's plan to competitively bid the operation of the water system once it is purchased. The value estimates would also be subject to dramatic change if it is held in a pending lawsuit that Tennessee-American has no franchise to use Chattanooga city streets. A hearing on the lawsuit is scheduled on the lawsuit on August 13, 1999.

Chattanooga Mayor Jon Kinsey has noted that Tennessee-American Water Company could have minimal value if no franchise to use the city streets exists.

For more information, please call Ken Hays, Chief of Staff at (423) 757-5152.