West Virginia American Water Files Infrastructure Replacement Program Application
April 29 2016 - 1:07PM
Business Wire
Proposed program would accelerate company’s
infrastructure investments to enhance water service reliability
West Virginia American Water filed an application today with the
Public Service Commission of West Virginia (PSC) seeking approval
of an Infrastructure Replacement Program (IRP). The purpose of an
IRP is to address the national challenge of aging infrastructure by
directing additional investment to areas where improvements are
needed.
The company seeks cost recovery on $32.5 million of its planned
$107 million of capital investments in 2016 and 2017 through the
proposed IRP with a separate charge on customers’ bills effective
Jan. 1, 2017. If granted, the charge would be calculated as a
percentage of the total monthly bill, representing an increase of
1.9 percent or 89 cents per month for the typical residential
customer using 3,204 gallons.
The IRP application is modeled after a statute enacted by the
West Virginia Legislature in 2015, which authorized the PSC to
approve expedited cost recovery of natural gas utility
infrastructure projects deemed just, reasonable and in the public
interest. This type of investment recovery mechanism will allow
West Virginia American Water to accelerate its water main
replacement program.
“Pre-approved infrastructure replacement programs are
recommended regulatory practices for water utilities by the
National Association of Regulatory Commissioners and are currently
in place in numerous states, including here in West Virginia for
gas utilities,” said West Virginia American Water president Jeffrey
McIntyre. “We believe the accelerated infrastructure investment
proposed in the IRP will strengthen our water system and, over
time, create real operational efficiencies and reduce costs
long-term for our customers.”
The scope of the proposed program is structured around seven
categories of facilities, including water mains, meters, valves,
hydrants, and certain plant, tank and booster station investments.
The purpose is to prudently invest in reinforcing, strengthening
and providing resilience to the transmission and distribution
system. A detailed list of individual infrastructure replacement
projects organized by district is included in the filing and
outlines the specifics of the company’s plan to invest $16.5
million. The planned upgrades will replace more than 22 miles of
water main this year, along with hydrants, valves, manholes,
services and other qualifying projects.
The proposal includes multiple consumer protections, such as
annual reconciliations, annual caps, cumulative caps and earnings
limits. Charges stemming from this program would be calculated
annually until rolled into the company’s rates in a future rate
case, at which time the IRP charge would reset to “zero.”
“The true benefit of an IRP to our customers is the elimination
of large, cyclical rate increases that reflect cost recovery of
multiple years of company investments all at one time,” McIntyre
said. “An IRP also allows for an up-front regulatory review of our
proposed infrastructure replacement projects each year, and then
provides a way for customers who benefit from these investments to
make very small payments each month toward these investments.”
In its February 2016 rate order, the PSC acknowledged that its
previous use of a historic test year inadequately supported the
company’s rate base due to a combination of circumstances unique to
West Virginia American Water. To address the problem, the PSC
authorized a rate adjustment to account for the $150 million the
company invested between its last rate case and the date new rates
went into effect. The order also invited the company to seek an IRP
in a separate filing as a way to recover investments in a timely
manner moving forward, with the goal of positioning the company to
continue to maintain and replace facilities, maintain and improve
service and secure the capital necessary to carry out its public
service mission.
West Virginia American Water recognizes that some families face
economic challenges and offers two assistance programs for
customers who are struggling to pay their bills. The company helps
fund the West Virginia Utility Assistance Program Dollar Energy
Fund, through which eligible customers may receive one grant per
year, per household applied directly to their water bill. The
company also offers a Special Reduced Rate Residential Service
(SRRRS) program, which provides a 20 percent discount on
residential water rates year round for low-income customers
determined eligible by the West Virginia Department of Health &
Human Resources.
The PSC will conduct a review of West Virginia American Water’s
IRP application, and the company has requested that an order be
issued within a six-month period. If approved, the company
anticipates filing its annual IRP plan by July 1 of each year.
West Virginia American Water, a subsidiary of American Water
(NYSE: AWK), is the largest water utility in the state, providing
high-quality and reliable water services to approximately 550,000
people. Founded in 1886, American Water is the largest publicly
traded U.S. water and wastewater utility company. Marking
its 130th anniversary this year, the company employs more than
6,700 dedicated professionals who provide regulated and
market-based drinking water, wastewater and other related services
to an estimated 15 million people in 47 states and Ontario,
Canada. More information can be found at
www.westvirginiaamwater.com.
Connect with us:
Facebook.com/wvamwater • Twitter.com/wvamwater •
YouTube.com/wvamwater
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version on businesswire.com: http://www.businesswire.com/news/home/20160429005946/en/
West Virginia American WaterLaura Jordan, External Affairs
ManagerOffice: 304-340-2089Mobile:
304-932-7158Laura.Jordan@amwater.comwww.westvirginiaamwater.com
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