Pennsylvania American Water Files Rate Request

Pennsylvania American Water Files Rate Request

Approximately $731 million of capital investments drives request; Tap water cost remains reasonable at about one penny per gallon

HERSHEY, Pa.--(BUSINESS WIRE)-- Pennsylvania American Water today filed an application with the Pennsylvania Public Utility Commission (PUC) requesting a $6.12 a month increase in water rates for a typical residential customer. The company’s request would bring a typical monthly residential water bill, using 3,960 gallons per month, to $58.63, meaning the cost of tap water for most households would remain at about one penny per gallon.

Pennsylvania American Water President Kathy L. Pape said the primary reason for the rate request is the approximately $731 million that the company will have invested in system improvements since its last rate case in 2011. These capital investments, which include upgrades to treatment plants, storage tanks, wells and pumping stations, are necessary to enhance service reliability, water quality and fire protection for the approximately 390 communities served by Pennsylvania American Water.

The company will also have replaced approximately 300 miles of aging pipe, as well as valves, service lines, hydrants and other parts of its nearly 10,100-mile network of water and sewer lines.

“This rate request is driven by the prudent capital investments that we’ve made to maintain and upgrade our infrastructure, so that we can ensure that our customers continue to receive reliable service that meets all regulatory standards,” said Pape, who served on the Governor’s Sustainable Water Infrastructure Task Force in 2008.

Last month, the American Society of Civil Engineers issued its latest report card on the nation’s water and wastewater infrastructure, and both received a “D” grade. If these critical issues aren’t addressed, Pape said, the result will be water disruptions, impediments to emergency response, damage to other types of infrastructure, as well as unsanitary conditions, increasing the likelihood of public health issues.

As the state’s aging infrastructure continues to fall into disrepair, Pape said Pennsylvania American Water’s capital investment is designed to address these challenges. “We believe proactive capital improvements are more cost-effective and save money in the long run, while protecting our customers’ quality of life,” she said.

Pape stated that Pennsylvania American Water’s rates are based on the actual cost of providing water service. “To mitigate rate increases, we work very hard to control our costs and operate as efficiently as possible. In fact, we have reduced operating expenses since our last rate filing by increasing energy efficiency at our facilities while lowering chemical, fuel and maintenance costs,” she said.

If the PUC were to grant the entire request, the typical Pennsylvania American Water residential customer would receive a day’s worth of water for approximately $1.95. “The quality, reliable water service we deliver to customers’ homes and businesses would remain a remarkable value at about one penny per gallon,” said Pape.

In its application to the PUC, Pennsylvania American Water also requests adjustments to wastewater rates for customers who receive sewer service from the company. The changes affect approximately 17,000 wastewater customers in Coatesville, Claysville, Clarion and the Poconos region.

The company’s filing requests that the new rates become effective June 29, 2013. However, the PUC typically suspends such requests for up to nine months (January 2014) to permit a complete investigation and analysis. Pennsylvania American Water is seeking a total annual revenue increase of approximately $58.6 million.

Pennsylvania American Water, a subsidiary of American Water (NYSE: AWK  ) , is the largest water utility in the state, providing high-quality and reliable water and/or wastewater services to approximately 2.2 million people. Founded in 1886, American Water is the largest publicly traded U.S. water and wastewater utility company. With headquarters in Voorhees, N.J., the company employs more than 6,700 dedicated professionals who provide drinking water, wastewater and other related services to an estimated 14 million people in more than 30 states, as well as parts of Canada. More information can be found by visiting www.amwater.com.



Pennsylvania American Water
Eastern/Central Pennsylvania:
Terry M. Maenza
T: 610-670-7789 ext. 1009
M: 610-849-6484
terry.maenza@amwater.com
or
Western Pennsylvania:
Gary Lobaugh
T: 724-873-3674
M: 724-944-5148
gary.lobaugh@amwater.com

KEYWORDS:   United States  North America  Pennsylvania

INDUSTRY KEYWORDS:

Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

DocumentId: 2397694, ~/Articles/ArticleHandler.aspx, 4/20/2014 8:22:38 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...