Public Service Commission approves 7 percent water rate increase
CHARLESTON, W.Va. -- Water rates for 171,000 West Virginia American Water customers will go up 7 percent next month under a rate plan approved Thursday by the state Public Service Commission.
Average residential customers would see rates go up between $2.77 to $3.57 a month under the new rate plan.
The commission's ruling approves most aspects of a compromise proposal negotiated between the water company and state regulatory staff in July.
The water company had originally approached the commission last December seeking a $24.2 million increase that would have raised residential rates by nearly 20 percent.
The company said the increase was needed to recoup the nearly $85 million it has spent since 2009 on rehabilitation of water storage tanks and upgrading water lines, booster stations and water treatment facilities.
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.
In July, water company attorneys, PSC staff and the Consumer Advocate Division presented a compromise proposal, referred to as a joint stipulation, that allowed for a smaller, $8.1 million water rate increase.
The agreement also included a "stay-out" provision that would prevent West Virginia American Water from filing for another rate increase before Jan. 1, 2015.
In addition to the water rate increase, the compromise also called for an increase in sewer rates for the 1,100 customers in the company's Fayetteville wastewater system.
The original proposal sought to raise $337,412 in annual revenue for that system. But because that would have required a hefty 44 percent increase in sewer rates for those customers, the compromise agreement allowed the water company to spread $231,151 of those costs across its water rate base.
As a result, sewer rates for Fayetteville customers would rise by about 14 percent.
With that transfer added in, the combined rate increases will generate nearly $8.4 million annually from water customers and about $106,000 from sewer customers.
While the commission approved the rate structure Thursday, it questioned the justification for the rate shift due to a lack of detail regarding the Fayetteville system's expenses.
The commission's order said the joint stipulation negotiated between the company and other parties "did not adequately support the amount of corporate operating expenses allocated to sewer customers."
To address that, the commission ordered that West Virginia American Water, during its next rate case, must study and present results detailing how its system expenses were allocated across its water and sewer customers.
West Virginia American Water president Jeff McIntyre said in a statement Thursday the company was satisfied with the commission's ruling.
"We appreciate the commission's thorough examination of and ruling on this joint stipulation, which all parties agreed is a fair and reasonable resolution," McIntyre said.
"The settlement was based on extensive negotiations and substantial compromises by all parties, and with the commission's modifications, we still believe this order is a fair and reasonable resolution with the best interest of our customers at its core," he said.
The order allows the new rates to take effect Oct. 11.
The water company said the average residential customer, using about 3,315 gallons a month, would see a monthly bill increase of about $2.77, from $39.11 to $41.88.
The state Consumer Advocate Division, which based its calculations on customers using 4,500 gallons each month, said the new rate plan would increase the average bill by about $3.57 from $50.50 to $54.07 each month.
Contact writer Jared Hunt at firstname.lastname@example.org or 304-348-4836.