The Public Service Commission's order granting a 15.1% rate increase is 125 pages long, but it is more notable for what is not in it than what is. The order goes into great detail on economic issues like the water company's tax expenses, wages and benefits, and rate of return. These clearly matter, but what you will not find in the order is any discussion of the details of West Virginia American Water’s actual investments in our water system and whether those investment priorities are in the best interests of ratepayers.
Advocates for a Safe Water System and other parties in the case emphasized West Virginia American Water's flawed priorities, which are largely dictated by its New Jersey-based parent company, American Water. Here are just some of the things we learned in the case (read our arguments in the case):
- The water company will take nearly 400 years to replace water mains at the current rate
- The water company plans to spend more on meter replacement than on main replacement in the next five years
- The water company is able to capitalize and earn a profit on any segment of water main that it replaces in response to a leak. In other words, the water company is earning a profit on many of its leak repairs.
- The water company does not appear to have prioritized main replacement projects needed to improve reliability
But none of these issues were addressed in the order. The PSC instead seems perfectly happy to trust West Virginia American Water to spend our money in the best interests of ratepayers, without any further oversight from the Commission. However, we know that West Virginia American Water will continue to spend our money according to the priorities dictated by shareholders and its parent company in New Jersey.
The PSC was dismissive of the public outrage sparked by this case, describing it as “unfortunate” that the water company’s request for a rate increase came at a time when the water company is “the subject of intense scrutiny” as a result of the 2014 water crisis. The PSC would clearly prefer to go back to the good ol’ days when the general public kept its nose out of the PSC’s highly technical process.
We’re deeply disappointed by the PSC’s decision – but we are not terribly surprised. This decision emphasizes all the more the need for fundamental change to create a water system that is actually accountable to our community.