CHARLESTON, W.Va. — The state Public Service Commission is expected to issue an order Wednesday on West Virginia American Water Company’s request for a 28 percent rate increase which, if approved, would total more than $35 million.
That order will come on the heels of the release of a national report from Food and Water Watch, a nonprofit advocacy group, showing the company’s West Virginia customers are already paying some of the highest rates for water anywhere in the United States.
On a list of the 500 largest water systems in the country, in terms of people served, the rates for West Virginia American Water Company’s districts in the Kanawha Valley and Huntington were tied in the 11th and 12th places, with average customers charged nearly $711 annually for water.
“I knew that our rates are high and have been going up for some time. The most recent rate increase that West Virginia American Water has asked for is their eighth since 2000,” Cathy Kunkel, a member of the steering committee for Advocates for a Safe Water System, said of the numbers.
“The rates have definitely been going up but, until this report came out, I didn’t realize how high they ranked among large water systems in the country.”
The proposed 28 percent increase would take annual water expenses to more than $900, making West Virginia American Water the most expensive large, private water system in the entire country, according to analysis from Kunkel’s organization.
It’s the kind of statistic that, she said, cannot be ignored.
“I’m just hoping that it helps make people realize and start to question why we pay such high rates for water here given that our service is not terribly reliable and we have a growing infrastructure problem and lack of investment in our water mains,” Kunkel said.
“Are we really getting what we’re paying for?”
Subsidiaries of American Water Company in both Pennsylvania and California are in five of the top ten slots in the report from Food and Water Watch out of Washington, D.C., an outgrowth organization of Public Citizen.
West Virginia American Water Company provided the following response to the report:
The ASWS press release is based on misleading information, citing a report that ignores important facts and lacks essential context. Straight rate comparisons do not provide a complete picture of the total cost of providing water service, which is affected by geographic area, water source, distance of water source to customer, customer density and infrastructure age.
It is impossible to make a true apples-to-apples comparison of rates between systems, and experts agree that the practice of rate comparison is unwise. In fact, the new Food & Water Watch report cites three separate papers (the Great Lakes, California, and Delaware rate surveys) that each explicitly warn against the very rate comparison practice Food & Water Watch employed as the basis for their report.
West Virginia American Water’s rates reflect the full cost of providing service, whereas many public water utilities do not bill for the full cost of service due to federal, state and local subsidies. We also pay millions of dollars each year in federal, state and local taxes, which public entities do not.
Each day, we treat and pump 50 million gallons of water through 4,100 miles of water mains throughout the state. That is more than 200,000 tons of water being moved as far as 70 miles through mountainous terrain before it reaches our customers – all of this at a price of about a penny per gallon.
One final point of clarification is that the average residential WVAW customer uses approximately 3,250 gallons of water per month or 39,000 gallons per year. Therefore, the average annual WVAW customer bill is $495 and not the $711.
The Food and Water Watch study is based on usage of 60,000 gallons a year.
On average, researchers with Food and Water Watch concluded that large, for-profit, privately-owned water systems charge, on average, 58 percent more than large, publicly-owned water systems.
The ten most affordable rates on the list of 500 came from publicly owned and operated water systems. At the bottom of the list is Phoeniz, Az. where residents are charged an average of $84 annually for water.
The most expensive water in 2015, according to the report, came from the public water system in Flint, Michigan where residents were paying an average of $864 annually for water that, until recently, was contaminated with lead.
Kunkel said West Virginia should consider following the national trend toward public water system ownership. “The last few years have really opened up a lot of people’s eyes to how serious the problems with our water system are getting,” she said.
“In this rate increase (from WVAWC), we’ve really seen the water company prioritizing the financial interests of its parent company over the needs of ratepayers.”
During an Oct. 2015 public hearing in front of the PSC on the proposed rate increase, Laura Jordan, external affairs manager for WVAWC, said the hike was necessary to pay for system improvements that had already been completed.
“Our rate request is based on the capital investment we’ve made since 2012, which is the year that our rates are currently based on,” Jordan said at that time.
“By the time new rates go into effect, we will have invested $150 million in system improvements without any recovery on those investments. This is our request to have appropriate recovery for the investments we’ve already made in the system.”
Without an order from the PSC, WVAWC’s proposed 28 percent rate increase is scheduled to automatically take effect at 12 a.m. Thursday.
A separate PSC investigation into West Virginia American Water’s handling of the Jan. 2014 Freedom Industries chemical spill is ongoing.
WVAWC serves approximately 168,000 locations in Boone, Braxton, Cabell, Clay, Fayette, Harrison, Jackson, Kanawha, Lewis, Lincoln, Logan, Mason, Mercer, Putnam, Raleigh, Roane, Summers, Wayne and Webster Counties along with 1,050 sewer customers in Fayette County.