Settlement Approved in Pennsylvania American Water Rate Case

The Pennsylvania Public Utility Commission (PUC) today unanimously approved a settlement that allows Pennsylvania American Water to increase water rates. The new rates approved under the PUC settlement maintain the cost of water service at about one penny per gallon for Pennsylvania American Water’s customers.

The typical monthly residential water bill for Pennsylvania American Water customers using 3,960 gallons will increase by less than $3 per month, from $52.51 to $55.45. The new rates take effect January 1, 2014.

“We believe this is a fair and reasonable settlement that balances our customers’ interests with the company’s need to recover costs associated with the hundreds of millions of dollars that we have invested for system improvements,” said Pennsylvania American Water President Kathy L. Pape. “We commend the Office of Consumer Advocate and the other parties who worked with us to resolve the case.”

Pape cited the company’s approximately $731 million in system improvements since its last rate case in 2011 as the primary driver of the rate increase. These capital investments include upgrades to treatment plants, dams, storage tanks, wells and pumping stations, which are needed to maintain and improve service reliability, water quality and fire protection for the company’s more than 650,000 customers across the state. Pennsylvania American Water has also replaced about 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.

As the commonwealth continues to face problems with aging and crumbling infrastructure, Pape said Pennsylvania American Water’s reinvestment is designed to address these challenges by making “prudent and proactive capital improvements that are more cost-effective and save money in the long run.” Pape served on the Governor’s Sustainable Water Infrastructure Task Force in 2008.

She noted that even with the rate increase, Pennsylvania American Water customers “will continue to receive quality, reliable water service at the remarkable value of about one penny per gallon.”

The settlement approved by the PUC also includes adjustments to wastewater rates for customers who receive sewer service from the company. The changes affect approximately 18,000 wastewater customers in Coatesville, Claysville, Clarion and the Poconos region.

The settlement grants an increase of approximately $26 million in annual revenue. The company had filed the rate request with the PUC on April 30, 2013, seeking an 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.