W.Va. American Water wants 19.7% rate hike
CHARLESTON, W.Va. -- West Virginian American Water wants to raise rates for customers by 19.7 percent.
The water company filed the rate hike request with the state Public Service Commission late Friday afternoon. The additional $24 million in revenue is needed to help recoup more than $85 million the company has spent to improve water lines and treatment plants since 2009, the company said.
The upgrades include replacement of pipes in water distribution systems, rehabilitation of the company's water system tanks and upgrades to pumping stations and computer systems, said Laura Jordan, spokeswoman for WVAW.
"We believe it is more cost-effective in the long run and therefore better for our customers to proactively make needed system improvements," WVAW President Jeff McIntyre said in a statement. "We work very diligently to keep expenses and rates down, but we have to balance that objective with the costs associated with stricter state and federal requirements as well as aging infrastructure."
The average WVAW customer would see a jump of $8.13 per month if state regulators approve the request, Jordan said.
An average residential customer uses 3,300 gallons of water per month, which would cost $1.57 per day worth of water, she said.
Tap water would still remain about a penny per gallon if the full rate hike is approved, Jordan said.
Kanawha County Commission President Kent Carper said the rate hike comes at a bad time.
"Here it is, right before Christmas, and they're filing a rate increase of nearly 20 percent, on top of previous rate increases," Carper said. "It's a tough pill to swallow, especially if you can't afford the water needed to swallow the pill."
WVAW rates will have increased nearly 50 percent over the past five years if the PSC approves the latest rate hike request.
"I can't imagine how an increase of this magnitude could be warranted," said Byron Harris, consumer advocate for the PSC. "West Virginia American already has among the highest rates in the nation, so a 19.7 percent increase is going to put a significant burden on customers."
Commissioners have 10 months to review the water company's request. Public hearings are expected, and any higher rates likely wouldn't take effect until Oct. 10, 2013.
"We're going to scrutinize all of their costs and all of their management decisions and determine what the correct rate for West Virginia American customers should be," Harris said.
In June 2010, WVAW requested a 15 percent rate increase. The company later trimmed the request to 13 percent. In April 2011, though, the PSC approved a rate hike of only 4.4 percent.
In response to the lower-than-expected rate increase, West Virginia American cut its capital spending budget by $5.2 million, scrapped major pipe replacement projects and eliminated construction plans that involve public/private partnerships.
The company also tried to lay off 31 employees, but the PSC ordered the utility to keep all but a handful of the workers.
The state's largest water utility, WVAW also has West Virginia's highest rates, Harris said.
WVAW customers pay $50.50 on average for 4,500 gallons of water. Fairmont has the next highest rate in West Virginia, at $39.92 a month.
WVAW has about 170,000 customers in 19 counties. The company serves Charleston and Huntington.
Carper said the Kanawha County Commission's water bill would increase about $8,000 a year if the PSC approves the rate hike.
"This isn't just going to affect individuals," Carper said. "Look at what it will cost the school board, the city of Charleston and the private sector, too."
The water company also is requesting an 81 percent rate increase for wastewater customers. WVAW owns one wastewater system, the Fayetteville Wastewater Treatment Plant. If the rate increase is granted in full, wastewater rates would increase the average residential monthly sewer from $35.78 to $65.81.
The company said in a statement that it invested $682,000 in infrastructure improvements at the Fayetteville plant between 2008 and 2011 "to bring this troubled system into regulatory compliance."
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