West Virginia American Water filed an application today with the Public Service Commission (PSC) of West Virginia, seeking approval of its 2020 infrastructure replacement program and associated Distribution System Improvement Charge (DSIC).
Image: The plan includes approximately $36 million of investment for infrastructure replacement and system upgrades. Photo courtesy of rony michaud from Pixabay.
The plan includes approximately $36 million of investment for infrastructure replacement and system upgrades.
“Through the annual infrastructure replacement program, we have been able to expand our capital program and reduce our water main replacement cycle from 400 years to 100 years,” said Rob Burton, president of West Virginia American Water. “The accelerated investment achieved through the DSIC program allows us to strengthen our water system through large-scale capital projects while creating operational efficiencies and reducing long-term costs for our customers.”
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 2020 Distribution System Improvement Charge of 2.77 percent, representing an increase of $1.50 per month for the average residential customer using 3,132 gallons.
“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.”
West Virginia American Water’s 2020 infrastructure replacement plan includes $18.2 million to replace or upgrade more than 30 miles of water mains; $4.5 million to replace service lines and fire hydrants; $5.5 million to replace water meters; $3.6 million for post-acquisition investment on troubled water systems; $3 million on water treatment improvements; and $1.2 million on water storage tanks.
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.
Source: Company Press Release