Pennsylvania American Water Files Rate Request

Proposed increase keeps tap water cost at one cent per gallon

HERSHEY, Pa., April 24 /PRNewswire/ -- Pennsylvania American Water today filed an application with the Pennsylvania Public Utility Commission (PUC) requesting a $5.92 a month increase in rates for a typical residential customer. The company's request would bring a typical monthly residential water bill, using 4,200 gallons per month, to $48.90, keeping the cost of tap water for most households at approximately one penny per gallon.

Pennsylvania American Water President Kathy L. Pape said one of the key reasons for the rate request is the $310 million dollars that the company will have invested in system improvements since its last rate case in 2007 to enhance water quality, service reliability and fire protection for customers. The capital investments include upgrades to water treatment facilities, storage tanks, wells and pumping stations. In addition, Pennsylvania American Water replaced and rehabilitated approximately 175 miles of aging water main, as well as valves, service lines and other parts of its nearly 9,600-mile distribution system.

"Much of this rate request is driven by Pennsylvania American Water's capital investments to maintain and upgrade our infrastructure and ensure that the drinking water we deliver meets all quality standards," Pape said. "Our strategy is to make proactive and prudent investments, which is more cost-effective in the long run and reduces the risk of major service and water quality issues."

Pape, who served on Governor Rendell's Sustainable Water Infrastructure Task Force last year, noted that many communities are facing crumbling water infrastructure and drastic rate hikes, because they chose to defer necessary maintenance and delay investments. The Task Force reported that capital improvements required for water systems across Pennsylvania will total $36.5 billion over the next 20 years.

She said the U.S. Environmental Protection Agency recently reported that the nation's water utilities need $335 billion in infrastructure investments over the next 20 years to replace thousands of miles of pipe and for upgrades to treatment plants, storage tanks and other assets to ensure public health.

"Our rates are based on the actual cost of providing water service," Pape said. "We work hard to keep operating expenses and rates down, but we have to balance that objective with the need for significant capital investment to meet increasing state and federal requirements. Furthermore, our production expenses, such as chemicals, energy costs and facility maintenance, have far outpaced the rate of inflation over the past two years."

If the PUC were to grant the entire request, the typical Pennsylvania American Water residential customer would receive a day's worth of water (approximately 140 gallons) for approximately $1.60. "This amount still translates to about one penny per gallon for quality water delivered directly to the customer's home. With few exceptions, water will remain the lowest utility bill that a household pays," said Pape.

The company's filing requests that the new rates become effective June 23, 2009. However, the PUC typically suspends such requests for up to nine months (January 2010) to permit a complete investigation and analysis. Pennsylvania American Water is seeking a total annual revenue increase of approximately $58 million.

Pennsylvania American Water, a wholly-owned subsidiary of American Water (NYSE: AWK), is the largest investor-owned water utility in the state, providing high-quality and reliable water and/or wastewater services to more than 2 million people. Founded in 1886, American Water is the largest investor-owned 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 32 states and Ontario, Canada. More information can be found by visiting www.amwater.com.

SOURCE Pennsylvania American Water

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