WSAZ Investigates | Subsidies draw criticism in WV American Water rate case - WSAZ

WSAZ Investigates | Subsidies draw criticism in WV American Water rate case

CHARLESTON, W.Va. (WSAZ) - Witnesses criticized two parts of West Virginia American Water’s proposed rate increase -- aspects aimed at subsidizing the company’s expansion into wastewater, as well as a discount for low-income households.

Those criticisms came Wednesday as attorneys for and against the company’s proposal wrapped up testimony before the state’s Public Service Commission.

West Virginia American Water is asking to increase both its base rate and a surcharge for infrastructure. Combined, the two hikes could increase your family’s water bill between $17 to $25 a month, depending upon how much water you use.

Our WSAZ Investigation, the High Cost of H2O, found the cost of that service has been steadily increasing.
West Virginia American’s monthly water bill has doubled since 2005.

The company’s answer — steep discounts for low-income households. A spokesperson said some could pay as little as $10 a month.

That plan drew criticism Wednesday -- a PSC staff analyst and an expert for the state’s consumer advocate division testified the cost of those discounts will actually be paid by middle-class and higher-income customers, as well as others with low incomes just above the cutoff line.

“The company’s projected 25 percent of low-income, of all of their low-income customers would sign up for this low-income tariff,” testified Geoffrey Cooke, a utilities analyst for PSC. “They would definitely have help, because they would have lower rates, but the other 75 percent would not. They would actually have higher rates because this low-income tariff. They would have to pick up the cost.”

West Virginia American attorneys argued the cost shift is no different than a rate freeze approved by the PSC years ago.

Cooke disagreed.

“I would note that the company’s proposed low-income tariff is a much bigger decrease,” he testified. “So, it’s a much more dollar amount that the other customers would be picking up compared to what is now.”

Another cost shift deals with West Virginia American’s expansion into wastewater. The company is wanting to use some of the money from those higher water bills to keep sewer rates more affordable.

Ralph Smith, an expert witness for the state’s Consumer Advocate Division, testified the company’s proposal forces water customers to shoulder too much of that burden.

“It sounds like customers are really mad about these rate increases, and the company does have a much broader base of water utility customers,” he testified. “I think trying to keep them less disappointed should be an important consideration of the commission.”

Smith also testified the formula used by West Virginia American to calculate its proposed increase will not slow future rate hikes.

“(If) you were inclined to allow West Virginia American to use a fully projected, future test year, I mean to me, you may as well take out a gun and point it at your left big toe and your left foot, because if you’re trying to reduce the frequency of rate cases, it looks like this will just have the opposite effect,” he testified.

West Virginia American argues that formula provides the best chance to delay future rate increases, while helping the company invest more money into fixing more water lines.

The PSC invited all sides to file briefs early January. A decision is expected weeks later.

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