PUC reduces proposed water rate increase
The hike is now less than half of what Pa. American Water Company requested.
The Pennsylvania Public Utility Commission has moved to dramatically reduce the revenue increase sought by Pennsylvania American Water Company.
On Thursday, the PUC voted 4-1 to approve a motion by Chairman Stephen M. De-Frank to scale back the rate changes for water and wastewater service and take other steps to safeguard consumers and enhance affordability programs — cutting it by more than 50% of what PAWC had initially requested.
The move comes following a lengthy investigation and an extensive series of public input hearings across the state.
In addition to cutting revenue increases, the motion also launches a PUC investigation into service quality issues raised at public input hearings.
The revised rate changes provide for a revenue increase of approximately $99.3 million per year, compared to PAWC’s initial request of nearly $202.4 million — which is a 9.99% increase, compared to PAWC’s proposed 20% increase.
“Today, I believe that the commission struck a balance by approving a significantly lower increase than requested while expanding customer benefits and access to the company’s various consumer assistance programs,” DeFrank said. “Additionally, the commission’s action today enables cumulative quality of service issues raised in this proceeding to be properly addressed.”
In a statement of support, Commissioner Kathryn L. Zerfuss noted the robust public participation in this rate case proceeding that will enhance service quality for many PAWC customers.
“I wanted to thank all of the customers who testified at a public input hearing, whether in person or telephonically. Your testimony was important in developing a full record and was carefully considered in this matter today,” she said. “The number of concerns raised by customers in Northeast Pennsylvania has sparked an internal investigation into service quality. I look forward to seeing the final report with key findings and any staff recommendations for future action.”
Vice Chair Kimberly Barrow acknowledged the robust participation by the ratepayers and the statutory advocates in this proceeding, stating she hopes to see that level of public input more often because it does inform the record.
Barrow also spoke of her concern with the number and nature of the complaints from customers in the northern part of the state and voiced her support for an investigation into service quality.
She cast a dissenting vote on the overall rate increase and requested “that PAWC seriously consider the balance between [Section 1329] acquisitions and rate case filings as well as customer rates and affordability.”
Barrow also acknowledged the frequency of PAWC’s rate cases despite the arsenal of rate recovery tools, such as the Distribution System Improvement Charge, which is currently being utilized by the company.
Water quality investigation
The motion launches an investigation by the PUC’s Law Bureau, working in conjunction with the Bureau of Technical Utility Services, concerning the large number of water quality concerns raised by consumers who testified at PUC public input hearings as part of this rate case — especially involving consumers in the Scranton area and other communities in PAWC’s northeast service territory.
The investigation will analyze the root cause of the complaints about dirty, discolored or bad-smelling water and make recommendations for future actions by PAWC to correct these issues.
Additionally, the finding of the TUS investigation into water quality issues may be referred to the Pennsylvania Department of Environmental Protection and the PUC’s independent Bureau of Investigation and Enforcement, if those actions are necessary.
It also rejects a proposal from PAWC to include an “adder” that would further boost the company’s returns — intended to reward PAWC’s management performance. In rejecting this extra financial reward for the company, the motion notes that these types of actions are intended for situations that show extraordinary service, but the substantial public input about quality-of-service issues make it inappropriate to award an adder in this case.
Customer service enhancements
Thursday’s motion calls on PAWC to target the donation of an additional $1 million by shareholders to the utility’s customer Hardship Fund — more than doubling the size of that fund, which currently receives a contribution of $750,000 per year. This donation would not be passed through as an additional charge to PAWC’s customers.
Additionally, PAWC will be required to expand income eligibility guidelines and other enhancements to the Hardship Fund grant program, so more consumers can benefit from that program.
The utility will also increase discounts and expand income eligibility guidelines for the “H2O” bill discount program to address affordability concerns and assist more income- qualified customers.
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