West Virginia American Water filed an application today with the Public Service Commission (PSC) of West Virginia, seeking approval of its 2021 infrastructure replacement program and associated Distribution System Improvement Charge (DSIC). The plan includes approximately $50.6 million of investment for infrastructure replacement and system upgrades.
“Through the annual infrastructure replacement program, we have been able to make needed investments in our water systems to improve reliability while reducing long-term costs for our customers,” said Rob Burton, president of West Virginia American Water.
West Virginia American Water’s 2021 infrastructure replacement plan includes $18.0 million to replace or upgrade more than 30 miles of water mains; $4.3 million to replace service lines and fire hydrants; $5.6 million to replace water meters; $2.2 million for booster stations, $8.3 million for post-acquisition investment on troubled water systems; and $12.2 million on water treatment improvements.
In an effort to communicate these investments to customers, West Virginia American Water maintains an Infrastructure Upgrade Map – a user-friendly, easily accessible online map that allows customers to view details about water main replacement projects and other capital investments as they are under construction and completed. West Virginia was the first state within American Water to use an interactive web-based map to display these types of projects, allowing customers to see the size and scope of the investments the company is making across its service area.
“The annual DSIC program provides transparency to our customers and allows for up-front regulatory review and approval of our proposed infrastructure upgrades to confirm that they are in the best interest of our customers,” Burton continued. “In turn, our customers receive increased service reliability from these projects and pay a small monthly surcharge rather than experiencing higher rate increases several years later that reflect multiple years of company investments.”
As part of this program, a surcharge is calculated annually based on planned capital investments and later rolled into the company’s base rates in a future rate case. Following the Tax Cuts and Jobs Act of 2017, West Virginia American Water offset the 2019 DSIC surcharge for customers by using the company’s excess deferred tax amortization toward the infrastructure replacement program. Customer DSIC rates will continue to be partially offset by this amortization in 2020. This method provided customers with a savings of $2.2 million in 2019 and an additional $1.5 million in 2020. The resulting proposal is a 2021 Distribution System Improvement Charge of 6.14 percent, representing an increase of $1.95 per month for the average residential customer using 3,132 gallons.
West Virginia American Water, a subsidiary of American Water (NYSE: AWK), is the largest investor-owned water utility in the state, providing high-quality and reliable water services to approximately 565,000 people. With a history dating back to 1886, American Water is the largest and most geographically diverse U.S. publicly traded water and wastewater utility company. The company employs more than 6,800 dedicated professionals who provide regulated and market-based drinking water, wastewater and other related services to 15 million people in 46 states. American Water provides safe, clean, affordable and reliable water services to our customers to make sure we keep their lives flowing. For more information, visit amwater.com and follow American Water on Twitter, Facebook and LinkedIn.