Bluefield Daily Telegraph, Bluefield, WV

February 22, 2010

W.Va. American Water seeking rate hike for system improvements

By GREG JORDAN

PRINCETON — West Virginia-American Water is asking the state Public Service Commission to consider a new rate hike to help pay for replacing aging infrastructure.

The petition the water company has filed with the PSC is in response to an order entered by the PSC in the company’s 2008 rate case. The order, issued in March 2009, recommended that the company discuss with PSC staff and the agency’s Consumer Advocate Division a new approach to funding infrastructure improvements.

Distribution System Improvement Charge (DSIC) programs allow for rate adjustments, outside of general rate case proceedings, to cover the costs of infrastructure replacement, company officials said.

The proposed DSIC program would initially add approximately 78 cents to the monthly bill of the average residential customer who uses 3,746 gallons of water per month, said Kelley Gillenwater, external affairs manager for West Virginia American Water.

Exactly how much of a DSIC consumers would pay would depend on how much water they used in one month, she said.

“Somebody may be an average user one month, then a greater user the next month,” Gillenwater said. For instance, a person who is an “avid gardener” may use more water one month than he or she does during other times of the year.

The water company has an operations center in Princeton and other in Hinton as well as a treatment plant near Bluefield, Gillenwater said.

The water industry standard for main replacement is a rate of 100 to 150 years, said Wayne Morgan, the company’s president.

However, West Virginia American Water’s system has almost 3,600 miles of water mains, enough to stretch from Maine to California. At the current rate the company can replace aging infrastructure, it would take 600 years to replace the entire system, Morgan said.

The PSC has scheduled hearing dates of Aug. 10, 11 and 12 beginning at 9:30 a.m. each day in its hearing room in Charleston. Public comment will be taken at the beginning of the hearing process. Copies of the petition and proposed tariff will be published in newspapers across the state and will also be posted at West Virginia American Water offices.

“It’s just a filing. It is totally up to the PSC,” Gillenwater said. “We want to stress that this is a positive thing. It would prevent us from having to go through costly regular rate proceedings.”

If the DSIC program is approved by the PSC, the water company would agree to submit quarterly updates to the agency requesting DSIC surcharges for eligible infrastructure projects. All these surcharges would be subject to audit at intervals determined by the PSC and would also be subject to an annual reconciliation.