PSC to decide on proposed settlement for West Virginia American Water rate hike

CHARLESTON, W.Va. — The largest water utility in the Mountain State is a step closer to gaining approval for another rate increase.

The state Public Service Commission is now considering a joint stipulation agreement from West Virginia American Water Company, the state Consumer Advocate Division and the PSC staff. The proposed settlement went before the PSC Tuesday for a brief hearing, cutting short what was scheduled to be a four-day evidentiary hearing. The PSC will make a final decision on the proposal before the end of next February.

West Virginia American Water Company’s Kanawha Valley Plant in Charleston.

WVAWC originally filed for a $33 million increase, which would have raised the average customer’s monthly water bill by 24 percent, more than $10 a month. The proposed settlement would decrease the case to $23 million, an increase of 17 percent. Under that plan, the average customer’s monthly bill would increase by $6.69.

The proposal also includes a 17 percent increase for a sewer facility the company operates in Fayetteville.

Rod Nevirauskas, senior director of rates & regulatory for American Water Service Company, told the PSC Tuesday the company needs the rate increase to recover costs from system upgrades, the decreasing number of customers and a decrease in usage.

“We’re bleeding usage and we’re bleeding customers here. We’re hoping that turns itself around or at least levelizes here in the near future, but that’s what causing the unit cost of water to go up,” Nevirauskas said.

PSC Chairman Mike Albert

PSC Chairman Mike Albert told Nevirauskas he remembers when the company used to promote that it could provide water for a penny a gallon. Albert said that’s two cents a gallon now.

“Do you think there’s a realistic amount or a realistic rate that you can’t exceed?” Albert asked.

Nevirauskas said he’s not sure where the ‘sweet spot’ is when it comes to improving the service while at the same time losing customers.

“At some point we have to balance the needs of the community, the wants of the system and the people that we serve against that affordability,” Nevirauskas said.

According to information from the water company, its Distribution System Improvement Charge (DSIC) will remain until new rates go into effect on Feb. 25, 2019, at which time the DSIC rate will be reduced to zero for the remainder of the year.

The money West Virginia American is saving from the federal tax cut plan also figures into the rate case and future cases, company officials said.

“As part of the proposed settlement, the company’s excess deferred taxes, brought about by the Tax Cuts and Jobs Act of 2017, will benefit customers and be used to help offset future DSIC surcharges until the company’s next rate case.”

The agreement mandates the company not seek another rate increase before April 30, 2021.

West Virginia American Water, which serves about 530,000 in the Mountain State, has said it’s invested $200 million in improvements to upgrade water mains, treatment plants, tanks, valves, booster stations and other infrastructure in the last three years. Nevirauskas said the improvements, despite fewer customers, would likely continue.

“Is the service I feel exemplary? Yes. Is it perfect? No. Is it exemplary? Yes. To maintain that level of service we’re making the necessary capital investments to get there and to stay there,” he said.

The proposed $23 million settlement includes $3 million to recover the cost for a three-year decline of 1.65 percent in residential customers and 2 percent decline in commercial customers.

The company adds the increase includes no costs associated with the Freedom Industries chemical spill.





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