Pennsylvania American Water Files Rate Request

Pennsylvania American Water today filed an application with the Pennsylvania Public Utility Commission (PUC) requesting a $6.42 a month increase in rates for a typical residential customer. The company’s request would bring a typical monthly residential water bill, using 4,150 gallons per month, to $54.87, keeping the cost of tap water for most households at approximately one cent per gallon.

Pennsylvania American Water President Kathy L. Pape said the primary reason for the rate request is the approximately $533 million that the company will have invested in system improvements since its last rate case in 2009. These capital investments, which include upgrades to water treatment facilities, storage tanks, wells and pumping stations, are necessary to enhance water quality, service reliability and fire protection for the communities served by Pennsylvania American Water.

The company will also have replaced approximately 177 miles of aging water main, as well as valves, service lines and other parts of its nearly 9,900-mile distribution system.

“This rate request is driven by the prudent capital investments that we’ve made to maintain and upgrade our infrastructure and to ensure that our drinking water meets all quality standards,” Pape said. “For example, major construction projects are underway at our water treatment facilities in the Pittsburgh, Hershey and Coatesville areas to improve treatment processes, increase the plants’ energy efficiency and enhance reliability with the installation of emergency generators.”

Pape, who served on the 2008 Governor’s Sustainable Water Infrastructure Task Force, noted that many communities are facing crumbling water infrastructure and drastic rate hikes, because they chose to defer maintenance and badly needed system improvements. According to the Task Force, water systems across Pennsylvania require capital investments totaling $36.5 billion over the next 20 years.

“We believe it is more cost-effective in the long run to proactively invest to make needed system improvements, rather than put customers at risk of serious service and water quality issues,” said Pape.

She stated that Pennsylvania American Water’s rates are based on the actual cost of providing water service. “We work hard to keep operating expenses and rates down, but we have to balance that objective with the increasing costs associated with tighter state and federal requirements. Furthermore, operating and maintenance costs have outpaced the rate of inflation over the past two years,” 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 $1.80. “This means we would still deliver quality, reliable water service to our customers at the reasonable cost of about one penny per gallon,” said Pape.

The company’s filing requests that the new rates become effective June 28, 2011. However, the PUC typically suspends such requests for up to nine months (January 2012) to permit a complete investigation and analysis. Pennsylvania American Water is seeking a total annual revenue increase of approximately $71 million.

Pennsylvania American Water, a wholly owned 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 7,000 dedicated professionals who provide drinking water, wastewater and other related services to approximately 15 million people in more than 30 states, as well as parts of Canada. More information can be found by visiting www.amwater.com.

In 2011, American Water is celebrating its 125th anniversary with a yearlong campaign to promote water efficiency and the importance of protecting water from source to tap. To learn more, visit www.amwater125.com.