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Planned 13.3 percent Pennsylvania American water rate hike hits opposition

Tuesday, Aug. 9, 2011

Pennsylvania American Water Co.'s plan for a 13.3 percent increase in water rates to pay for work on pipelines and plants is stirring objections, and will be examined at three public hearings this week in Western Pennsylvania.

The company typically seeks a base rate increase every two years, and this one would raise $71 million more annually. Residential customers in the Pittsburgh area who use what the utility says is a typical 4,150 gallons a month would pay $54.87, or $6.42 more.

Pennsylvania American has 637,000 customers in the state.

Pennsylvania American, part of American Water of Voorhees, N.J., the biggest publicly traded water utility in the United States, said it has spent $533 million on improvements since its last rate increase in 2009. That includes replacing 177 miles of main pipeline along its 9,900-mile system and installing emergency generators at treatment plants.

In the Pittsburgh area, about $230 million has been spent on projects including ongoing work at the Hays Mine treatment plant off Becks Run Road in Hays and the E.H. Aldrich plant in Elrama, Washington County.

Borough councils in Dravosburg and Lincoln adopted resolutions opposing the increase. State Sen. Jim Brewster, D-McKeesport, wrote to the state Public Utility Commission, urging rejection of the rate increase.

"With the economy the way it is, an increase in utilities at this time is not in the best interests of people living in those communities," said Tim Joyce, spokesman for Brewster.

Pennsylvania American has filed for rate increases every two years since about 1996, said Dianne Dusman, Pennsylvania's senior assistant consumer advocate, and there also are distribution surcharges that change quarterly.

The utility raised its rates by 9.4 percent in 2007 and 6.6 percent two years ago. This time, in addition to the 13.3 percent increase, the company is asking for the right to surcharge customers if purchased water or electricity costs rise.

The consumer advocate's office will make its recommendation to the PUC soon, Dusman said, but generally it's against the adjustments for water and power costs, along with the size of the proposed rate increase.

Rod Nevirauskas, rates and regulation director, said less than 10 percent of the water Pennsylvania American delivers to customers is purchased from other sources, but those costs along with electricity can be volatile. Another utility, Aqua Pennsylvania, is seeking an OK for similar surcharges.

A PUC administrative law judge will make a recommendation on the Pennsylvania American increase to the commission, which must make a final decision by Jan. 28.

American Water said last week its second-quarter revenue from regulated operations increased by 5 percent, or $28.4 million, from a year ago, mainly driven by rate increases, while operations costs rose 3.7 percent.

The company said it's is awaiting decisions in 11 states on rate cases that would bring in an additional $314.6 million a year.

Additional Information:

Water rate hearings

An administrative law judge with the state Public Utility Commission will take public comment on Pennsylvania American Water Co.'s proposed rate increase at these hearings:

• 6 p.m. today, Days Inn Heritage Room, 139 Pittsburgh Road, Butler.

• 1 p.m. Wednesday, Ramada Inn, 1170 W. Chestnut St., Washington.

• 6 p.m. Wednesday, Dravosburg borough office, 226 Maple Ave.



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