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Water credits coming soon, but nothing after that

CHARLESTON, W.Va. -- Customers of West Virginia American Water affected by the Elk River chemical leak should expect to see a credit on their next water bill, but it won't be for a huge amount, and there probably isn't any other financial help coming behind it.

Bills being sent out Friday will have a credit of $10.29 for residential customers and $20.58 for businesses, West Virginia American President Jeff McIntyre told the House Health Committee Thursday.

That equates to a 1,000-gallon credit for residents and 2,000 gallons for businesses.

Many customers had been upset when the promised credit did not appear in previous bills.

McIntyre blamed his company for that confusion, saying they had wanted to discuss the credit with the Public Service Commission first, but did not communicate that well.

The 1,000-gallon credit is based on the initial home-flushing instructions provided by the water company -- a total of 25 minutes of flushing. The water company has said that would use a maximum of 500 gallons, so it offered a credit of twice that amount.

Spooked by the chemical-licorice odor that has lingered in some cases long after the flushing, many customers have done much more flushing than initially recommended.

Dr. Letitia Tierney, the commissioner of the state Bureau of Public Health, said yesterday customers shouldn't hesitate to do more flushing. "I would encourage them to keep flushing, maybe start the shower, let it run for a few minutes before they get in," Tierney said. But McIntyre said there would likely be no further credit for what he described as "aesthetic issues."

"We think at this time that we've provided an appropriate amount of relief, essentially double what was laid out in the flushing protocol," he said. He said if customers wanted an additional credit, they could try contacting the company through its main toll free number, 1-800-685-8660.

Several members of the committee pressed McIntyre, looking for additional financial help for customers from West Virginia American, or its parent company, American Water.

Delegate Clif Moore, D-McDowell, asked McIntyre to approach American Water to provide financial relief to the region. "I can make that request, but understand that we're a company that's responding to events that we're not responsible for," McIntyre said. "Nobody's asking Freedom [Industries] for this money, probably because they've gone into bankruptcy. Everybody's turning to us."

Delegate Patrick Lane, R-Kanawha, pointed out that American Water is a company worth nearly $7.5 billion that pays about $200 million per year in dividends to stockholders.

West Virginia American has 93,866 customers in the affected area, the vast majority of which are residential. The credits it has promised would cost about $1 million.

"I'm still trying to get my head around who's going to be responsible for bearing the brunt of the costs," Lane said. He asked McIntyre if he would discuss the dividends the next time the company is allowed to ask for a rate increase, in early 2015.

McIntyre said West Virginia American was an independent company and its parent company's finances did not factor into how it sets its rates.

McIntyre said West Virginia American's entire revenue stream comes from the water it sells, and therefore from its customers. Its rates must be approved by the Public Service Commission.

"Is there a certain level of profitability built into those rates?" Lane asked. "Has that ever been zero or negative return on equity?" McIntyre said that it had not.

Ryan Palmer, a commissioner with the PSC, said when they set rates they look at every penny the water utility spends - on things like salaries, tanks, pipes and equipment -- and then set rates based on that. They usually allow a 9 to 10 percent return on investment on top of the utility's capital investments.

Palmer added West Virginia American always argued it's not getting a large enough return.

House Speaker Tim Miley and Minority Leader Tim Armstead sent a letter to Gov. Earl Ray Tomblin Wednesday requesting West Virginia American pay to fund further water testing in people's homes.

McIntyre said Thursday he did not think the company should have to pay for such testing, that Freedom Industries should pay, but water company officials were in discussions with Tomblin's office about doing so.

Reach David Gutman at david.gutman@wvgazette.com or 304-348-5119.


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