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Legislators urge alternative to Pennsylvania American Water rate hike

Michael DiVittorio
| Thursday, Aug. 11, 2011

Local legislators are encouraging an incremental increase, if any, to Pennsylvania American Water Co.`s rates, as opposed to PAWC`s current proposal of a 13.3 percent hike for most of the Greater Pittsburgh area.

That suggestion was made by state Rep. Bill Kortz, D-Dravosburg, at a Public Utility Commission public hearing in Dravosburg Wednesday night. Allegheny County Councilman Bob Macey, D-West Mifflin, and state Sen. James Brewster, D-McKeesport, supported the idea.

Kortz encouraged the PUC and PAWC officials to consider a rate freeze of one to two years as people continue to recover from a troubling economy, then increase rates 1.3 percent in the first year and 3 percent in each of the four following years, instead of a double-digit hike.

'The proposed 13.3 percent rate increase at this time is too steep and too severe, and would place yet another hardship on the residents of the 38th District,' Kortz said. 'To many seniors on fixed incomes and those unemployed, this is but another drain on their limited financial resources, and will amount to sticker shock, especially since their school property taxes were recently raised.'

Residents of McKeesport Area School District, which is comprised of Dravosburg, McKeesport, White Oak, Versailles and South Versailles Township, saw a tax hike earlier this year of .34-mills, setting the 2011-12 millage rate at 17.05.

PAWC spokesman Gary Lobaugh said the rate increase is to recoup expenses for various repair and improvement projects.

He distributed documents prior to the hearing that stated the company invested approximately $213 million in 2009 for improvements to the water treatment and pipeline system that serves more than 132,000 Greater Pittsburgh area customers, and broke ground in June 2010 on an approximately $101 million upgrade of its Pittsburgh area water treatment facilities.

The proposed hike would be a $6.42-a-month increase to $54.87 for a typical residential customer using 4,150 gallons per month. Set on an annual average usage of 49,800 gallons, that would be an increase from $581.40 to $658.44.

Administrative law judge Mary D. Long from the PUC`s Pittsburgh office presided over the Dravosburg hearing. Also on the panel hearing testimony were attorneys Anthony C. DeCusatis and Seth A. Mendelsohn representing PAWC, senior assistant consumer advocate Dianne E. Dusman from the state Attorney General`s Office, and PUC prosecutor Adeolu A. Bakare.

Macey said he understands financial dilemmas that organizations, corporate or public, have with infrastructure.

'We on Allegheny County Council battle this all the time, and as chairman of the public works department I can certainly appreciate the need of infrastructure and the means of funding it,' Macey said.

Macey also lauded the response of PAWC to Lincoln Place`s water main breaks and other experiences, but does not support its rate increase.

'I agree with Rep. Kortz,' Macey said. 'This is not the time, and I agree with his step-down program of funding.'

Brewster testified to some of the demographics of PAWC customers in his district.

'We do live in the second largest (area) of senior citizens,' he said. 'From a tax perspective, 35 percent (are) nonprofit. Local communities that are near are in Act 47, some of the highest poverty areas in the state of Pennsylvania. These are demographics that are well-documented. ... The customers we represent, our local elected officials here, we have to deal with them one-on-one each day.

'If a rate of this size is implemented, it will only cause those demographics to get worse. Prescription drugs may not get bought, food may not get purchased, rent may not get paid, mortgages may not get paid.'

Brewster noted PAWC may be able to justify the rate increase through analysis and infrastructure needs, but 'they have an audience that has really very little choice.'

'We can`t go somewhere tomorrow and get that product, and that product is very important to us,' Brewster said.

Baldwin resident Thomas V. Olup, a former state certified engineer who dealt with water distribution in Munhall, said he filed a formal complaint with the PUC regarding the PAWC proposed increase.

Olup said he had a few incidents with PAWC that required litigation. He also lauded the interaction with PAWC crew members, and criticized their bosses.

'Management has got to pay attention,' Olup said.

Beechview resident James Lewis testified that last summer he and several others dealt with 'disgusting water' and had to purchase multiple cases of bottled water before the water company did something about the problem.

Lewis, a representative of the Utility Workers Union of America Local 537, continued to express displeasure with his water service.

Washington resident Kevin Booth said he is an employee of PAW and a member of UWUA.

He said he is against the proposed rate hike, saying the company is financially sound.

'I do disagree with the 13 percent rate increase,' he said. 'I believe it is uncalled for at this time. The company is very profitable.'

Glenn Wagner, owner of Wagner`s Restaurant in Elizabeth, said he is concerned about the senior citizens who support his business and what may happen to them should the rate be approved, and suggested the rate be decreased.

'I just hope that the commission would take them into consideration,' Wagner said. 'As a government agency they support the senior citizens.'

Wagner also said he is currently in litigation with PAWC.

Ellwood City resident Jody Robertson testified to the partnership between PAWC and the Dollar Energy Fund, a nonprofit organization designed to help low-income families with their utility bills. Robertson said PAWC partnered with the Dollar Energy Fund 20 years ago when PAWC did not have to, and has used approximately $2.2 million to help 12,000 households in the state. Robertson said by PAWC helping those families it helps control costs for all customers.

Wednesday night`s session was the eighth of eight hearings across Pennsylvania addressing PAWC`s request, which involves increases in six areas and a slight decrease in a seventh.

The PUC voted June 9 to investigate PAWC`s request. The first hearing took place July 22 in Wilkes-Barre followed by sessions in Bushkill, Exeter and Camp Hill on July 27, July 28 in Norristown, Tuesday at the Days Inn in Butler and Wednesday at the Ramada Inn in Washington.

Long said testimony and information from the public hearings will be reviewed and considered by administrative law judges Angela T. Jones and Eranda Vero. They are expected to make a recommendation sometime in November to commissioners, who could issue a final ruling in January.

Increases elsewhere range from 25.6-110.9 percent. The latter is proposed for the Nittany area where, based on that annual usage rate, the bill would rise from $202.80-$427.80.

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