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Plan would raise water bills by 7 percent

CHARLESTON, W.Va. - The average West Virginia American Water customer's monthly bill will go up by 7 percent under a compromise rate plan filed Tuesday with the state Public Service Commission.

Under the proposal, which still needs final PSC approval, average residential customers would see rates go up by between $2.77 to $3.57 a month.

While it still means higher costs for consumers, the 7 percent increase is far less than the 20 percent the company sought.

It is also the last hike the utility's 171,000 customers will have to absorb until at least late 2015.

The compromise settlement plan was hashed out through negotiations between water company attorneys, PSC staff and the Consumer Advocate Division. It was presented to PSC commissioners during a hearing Tuesday afternoon.

"This agreement is based on extensive negotiations and substantial compromises by all parties as a way to expedite and simplify the resolution of this case," West Virginia American Water President Jeff McIntyre said in a statement.

"We think it's a fair settlement of the case, especially considering that customers are guaranteed of not having a rate increase over the next two years," said Byron Harris, director of the Consumer Advocate Division.

The water company filed a request with the PSC in December seeking rate increases to generate an additional $24 million in annual revenue for the utility.

The company asked for the additional revenue to help pay off about $85 million worth of system upgrades made since 2009.

Consumer groups, including the state chapter of the AARP, strongly campaigned against the rate plan, saying it would hurt already cash-strapped residents and seniors.

Consumer Advocate Division staff analyzed the company's accounting and financial projections and felt the company could justify a smaller $3 to $4.5 million rate increase.

"We felt like they had a lot of things in there they weren't likely to get in (a final commission) order," Harris said.

Several compromises were reached.

The Utility Workers Union of America, which represents workers at the water company and was participating in the rate case, did not endorse the final version of the plan.

If approved by the commission, the new rate plan would take effect in mid-October. The proposal also bars the company from filing another rate increase with the PSC until after Jan. 1, 2015.

Since the rate case process takes several months, the earliest the company could raise rates would be sometime in the fall of 2015.

Estimates for how much more the average customer will pay each month under the new plan vary, depending on how one defines average.

The water company said the average residential customer, who uses 3,315 gallons a month, would see a monthly increase of about $2.77, from $39.11 to $41.88.

Harris said most households use about 4,500 gallons each month. By that calculation, he said the average water customer would see their bill increase by $3.57 from $50.50 to $54.07 each month.

The proposal also increases sewer rates for nearly 1,100 wastewater customers in Fayetteville by 14 percent. It will bring in about $337,412 annually.

The water company had requested a 44 percent increase in those rates to cover system costs. The proposal helps ease those costs by spreading them out across the company's water ratepayers.

Harris said this was designed to help Fayetteville residents avoid a one-time massive rate shock.

Though water bills will go higher under the plan, Harris said the settlement was a reasonable compromise.

"Nobody's happy to have an increase in rates, but a 7 percent increase is better than a 20 percent increase like the company filed for," he said. "And we have an assurance that the company won't be able to raise rates again until very late in 2015." 

Commissioners have until October to approve or reject the proposal. 

Contact writer Jared Hunt at business@dailymail.com or 304-348-4836.

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