The largest investor-owned water utility in West Virginia filed rate requests with the state’s utility regulators Friday seeking an additional $40.8 million in annual revenue for water and wastewater operations combined, 26.1% more than the company’s current rates.
The average monthly residential sewer bill would jump from $54.14 to $71.84.
“That’s a pretty substantial increase,” said Robert Williams, director of the Consumer Advocate Division of the state Public Service Commission, an independent arm of the commission that represents the interests of utility customers.
Williams said Monday the division was disappointed by both the size and timing of West Virginia American Water’s requested rate hike.
“I’m sure they need money, but all their customers need money,” Williams said.
West Virginia American Water’s rate requests come after it received a 14% rate increase in February 2019 and a 15% rate increase in February 2016.
The newly proposed rates would not go into effect before Feb. 25, 2022. The state Public Service Commission will rule on the company’s request.
“The PSC will process this case just as it does all the other cases brought before us,” commission spokeswoman Susan Small said in an email. “(I)t is much too early in the process to comment on the specifics of the case.”
Company President Robert Burton defended the rate requests in a Friday evening news release, reporting the American Water subsidiary will have invested $252 million since its last rate hike in 2019 in statewide system improvements, including 48 miles of main replacement, pumping station improvements and improved treatment processes regulated at the federal and state levels.
“We understand the current environment caused by the pandemic, but we also remain focused on meeting the future needs of our customers through sound infrastructure and public health protection,” Burton said.
“This request is not driven by the pandemic and is based on our need to continue ongoing infrastructure improvements. We will work with the Commission to address any issues they raise while they review our request.”
But Williams noted West Virginia American Water has already recovered infrastructure replacement costs from a surcharge mechanism created for that purpose that the commission approved in 2016.
The surcharge mechanism, called a Distribution System Improvement Charge, has resulted in a $5.30 monthly increase for the average residential customer using 3,100 gallons per month since then. Of the $252 million that West Virginia American Water reported investing in system improvements since its last rate increase, the Distribution System Improvement Charge has covered $79 million, according to the company.
“The idea was that (the Distribution System Improvement Charge) would reduce the need for them to keep coming back in for repeated rate increases, and they’re coming back for a repeated rate increase on about the same schedule as before even with the DSICs,” Williams said.
In April 2016, then-West Virginia American Water President Jeffrey L. McIntyre told the Public Service Commission the surcharge mechanism would “dramatically reduce the level of unrecovered capital investment the Company has had to carry between rate cases.”
West Virginia American Water spokeswoman Megan Hannah said the surcharge reduced the proposed rate increase in its current request by $10 million.
The average monthly bill for West Virginia American Water residential customers using 3,100 gallons per month escalated from $39.67 at the start of 2015 to $57.30 at the beginning of 2021, a 44% climb.
“How can people continue to pay increases when our household of two is paying now close to $60.00 a month for water?” Libby Eplin, of Barboursville, wrote in letter filed Monday with the Public Service Commission protesting the rate hike. “I can’t imagine what others are paying with 4-6 members in the household. Not to think what this increase will do for the elderly and those on fixed incomes.”
In its news release announcing its rate hike proposal, West Virginia American Water noted it gives financial assistance to low-income customers that includes emergency grants and bill discounts.
West Virginia American Water provides water services to more than 500,000 people in the state.
“By making prudent, ongoing investments to maintain and upgrade our water and wastewater systems, West Virginia American Water is committed to protecting our communities from public health concerns and quality of life issues associated with failing infrastructure,” Burton said.
“We’ll be aggressively analyzing the filing(s),” Williams said.