From WV American Water Release

The Public Service Commission (PSC) staff, Consumer Advocate (CAD) and West Virginia American Water announced a joint agreement today regarding the company’s April 2016 request for an infrastructure replacement  program, referred to as a Distribution System Improvement Charge (DSIC).

The  joint stipulation reflects that the parties agree this isa fair and reasonable resolution of the case. It also allows West Virginia American Water  to receive more timely cost recovery of certain infrastructure investments deemed just, reasonable and in the public interest, which in turn  enables the company to accelerate its water main replacement program.


The agreement filed this afternoon requires PSC approval.


“The purpose of a DSIC is to address the national challenge of aging infrastructure by directing additional investment to areas where improvements are needed with a particular focus on main replacement,” said Jeffrey McIntyre, president of West Virginia American Water. “Along with the other parties, we hope that the Commission will accept this agreed upon proposal as a fair and reasonable resolution of the request with the best interest of our customers at its center.”


As part of this agreement, the parties recommend that the Commission approve a DSIC effective Jan. 1, 2017, for $29 million in system-wide improvements that West Virginia American Water will make in 2017.


The improvements include $11 million in water main replacement projects and $7 million to construct two new water storage tanks to improve service reliability on the  west end of the Kanawha Valley distribution system. Customers would pay a 1.09 percent surcharge on their monthly bills (approximately 52 cents for the average residential customer) to help fund these projects. Current customer rates reflect company investments made through February 2016.


Going forward, the authorized surcharge will reflect a portion of the company’s annual capital investments made within the same year that the surcharge is collected.


“The true benefit of a DSIC to our customers is the elimination of large, cyclical rate increases that reflect  cost recovery of multiple years of company investments all at one time,” McIntyre said. “A DSIC allows for an upfront regulatory review of our proposed infrastructure  replacement projects each year, while customers  will see the benefit  of these investments with increased service reliability.”


The agreement includes multiple consumer protections, such as annual reconciliations, annual  caps, cumulative caps and earnings limits. Charges stemming from this program would be calculated annually until rolled into the company’s rates in a future rate case, at which time the DSIC surcharge would reset.


“Pre-approved infrastructure replacement programs are recommended regulatory practices for  water utilities by the National Association of Regulatory Commissioners and are currently in place in numerous states, including here in West Virginia for gas utilities,” McIntyre continued.


“We believe the accelerated infrastructure investment proposed in the DSIC will strengthen our  water system and, over time, create real operational efficiencies and reduce costs long-term for our customers.”