In a significant regulatory decision, Pennsylvania American Water Co. customers are set to experience another increase in their water and sewage bills, marking the fourth rise in six years. Despite a request for a substantial hike to fund system upgrades, the state Public Utility Commission (PUC) approved a more modest increase, voting 4 to 1 in favor.
Commissioner Kimberly M. Barrow expressed concern during the meeting, highlighting that water bills have already seen a 35% increase since 2020. She stated, “The utility’s financial health is incredibly important. They can’t provide reliable service unless they’re financially sound. So that’s a big part of my job as a regulator. But right now, the scales are not balanced.”
Company’s Initial Proposal
Pennsylvania American’s initial proposal aimed to raise rates to support up to $1.2 billion in distribution system upgrades by mid-2027. The company argued that without these rate adjustments, it would struggle to attract investment for necessary improvements.
The new rates will be effective starting August 13. However, neither the PUC nor the utility has disclosed the exact impact on typical residential customers. Details are expected in bills issued after the new rates take effect.
According to initial estimates from November, the proposed rate increases were:
- Residential water bills: $95.27/month (up from $81.55, a 16.8% increase).
- Commercial water bills: $445.61/month (up from $379.78, a 17.3% increase).
- Industrial water bills: $9,759.49/month (up from $8,639.78, a 13% increase).
For sewage disposal:
- Residential: $119.50/month (up from $109.50, a 9.1% increase).
- Commercial: $532.62/month (up from $498.78, a 6.8% increase).
- Industrial: $15,213.96/month (up from $14,415.29, a 5.5% increase).
The proposed increases would have generated an additional $168.7 million in revenue, with $152.4 million from water and $16.3 million from sewage disposal.
Approved Rate Adjustments
The PUC’s approved increase results in $74.9 million in new revenue, split into $45.3 million for water (a 4.8% increase) and $29.6 million for sewage (a 14.2% increase). This is in contrast to the administrative law judges’ recommendation of a slight increase totaling $82.7 million.
Commissioner’s Debate
In the commission meeting, Barrow clashed with Chairman Stephen DeFrank and Commissioner Kathryn L. Zerfuss, both of whom supported the rate hike. DeFrank justified the increase by pointing to Pennsylvania American’s acquisition of 14 troubled water systems over the past decade, a move the commission sees as beneficial for public interest.
DeFrank also highlighted the company’s commitment to establishing a public water system in Dimock Township, Susquehanna County, an area without safe drinking water for nearly 20 years due to methane and contaminant issues believed to be caused by natural gas drilling.
Zerfuss echoed this sentiment, stating that while the rate increase is not a carte blanche for the company, it helps to upgrade systems while considering customer affordability. “The outcome is a just, reasonable and balanced regulator result,” she remarked in a written statement.
Barrow acknowledged the company’s efforts in improving troubled water systems, but pointed out that the generous rate increases since 2020 have resulted in Pennsylvania American having the highest water rates in the state. She emphasized the need for a better balance, given a 35% rate increase in recent years.
Pennsylvania-American serves approximately 682,000 water customers and 97,000 sewage customers across 37 counties, reaching about 2.5 million people in total.
