PUCO staff report recommends smaller rate increase for OAW
A staff report to the Public Utilities Commission of Ohio (PUCO) is recommending much lower water/sewer rate increases than the ones requested by Ohio American Water (OAW).
The report, issued Nov. 27, is part of the procedural process that defines the issues of the rate case, according to Mary Beth Johnson, OAW spokeswoman.
“We will review the PUCO staff recommendations,” said Johnson. “We have 30 days to get back to them with rebuttal testimony.”
The staff report does not reflect the final findings as the PUCO has not yet set a date for the public hearings on the OAW rate increase request. Those hearings will most likely be held in early 2010.
In Prairie Township, OAW provides water and sewer services to the Lake Darby and Westpoint subdivisions.
Under the proposed OAW rate hike request, the first two years, the utility rates would increase by 25 percent each year. In the third year, there would be an eight percent increase, and a seven percent increase in the final year.
According to Prairie Township Trustee Steve Kennedy, the average water bill per month for 10 units of water usage, which is average for a household, is $150. He estimates that the increases would lead water bills averaging $256 a month.
However, the PUCO staff report recommends significantly lower water rate increases of 5.85 percent to 7.27 percent and wastewater increases of 3.58 percent to 5.27 percent.
The PUCO staff report states, “Ohio American Water Company must find ways to better control costs. The company should strive for a reasonable cost trend that reflects a value close to the rate of inflation, preferably trending close to Ohio market conditions such as that of Ohio household income...The goal should be how efficiently the company can serve its customers.”
Speaking at the Sept. 16 Madison Township trustee meeting, OAW President David Little, stated, “We are a tax paying entity. We are a regulated utility. One hundred percent of all the costs of water and wastewater is reflected in the bill.”
According to Little, the company needs the latest round of increases to cover the cost of capital investments. Although the company is a public utility, it is not a municipal entity, and is mandated to pay property tax, which swallows up 18 cents out of every dollar paid by consumers.
Little said water mains and service lines are all subject to taxation. The company is also required to maintain fire hydrants, flush water lines, replace meters as necessary, operate the distribution system, detect leaks, and inspect manholes.
In a letter to the Messenger received Dec. 1, Little wrote, “Our rates are based on the true costs of providing water or wastewater service. The company works diligently to control operating expenses so that we can provide high-quality water service to our customers at a fair rate. Our goal is to balance that objective with the continuous need for significant capital investment to replace ailing infrastructure and meet increasing state and federal requirements. Ohio American Water continues to invest consistently in its systems to ensure that local water quality and service continues to meet local, state and federal quality standards.”
•On Sept. 9, Kennedy announced his plans to spearhead an effort against OAW’s proposed utility rate increase.
“It will be the fourth rate increase asked for since 2005,” said Kennedy. “This time, I believe it has the potential to devastate communities.”
Kennedy also stated that Lake Darby and Westpoint have the highest vacancy rate of all other areas in the township.
“That is mainly due to the high cost of water bills,” said Kennedy.
•“The (PUCO staff) report confirms what ratepayers have been telling the PUCO for years,” said Jim Welch, co-chair of Fight the Hike Ohio, a coalition of citizens and community leaders from 90 municipalities across the state opposing the proposed rate hike, “that if excessive water rate hikes don’t end now, the typical Ohio American Water bill will eventually be higher than an entire household paycheck.”
For information on Fight the Hike Ohio, visit FightTheHikeOhio.com.
Staff Writer Katie Sparks contributed to this article.