$38 million in infrastructure investment drives need for rate adjustments
On February 27, 2017, the Iowa Utilities Board (IUB) issued its final
order in Iowa American Water’s rate case that was filed on April 29,
2016. On March 24, 2017, the IUB approved the company’s rate design and
set an effective date of March 27, 2017.
The need for the rate adjustment was driven primarily by significant
investment made by the company to improve and replace water
infrastructure. According to Randy Moore, president of Iowa American
Water, the company has invested approximately $38 million in water
system improvements statewide in the last three years to ensure
continued high-quality water service.
“Reliable water service is essential to everyday life and a community’s
strong economy, and proactive water system upgrades today save money in
the long run,” said Randy Moore, president of Iowa American Water. “All
these investments in local water infrastructure systems enhance water
quality, service reliability and fire protection for customers while
keeping the cost of water service for most local households at about a
penny per gallon.”
The need to upgrade water systems is a national challenge. Earlier this
month, the American Society of Civil Engineers released its report on
the nation’s infrastructure and estimated $1 trillion in capital
spending would be needed across the nation over 25 years to replace
thousands of miles of pipe, upgrade treatment plants and comply with
stricter water quality standards. Iowa American Water is addressing this
Iowa American Water’s rates are based on the costs of providing water
service as reviewed and approved by the IUB. Moore added that Iowa
American Water has worked to control costs, reducing operating expenses
by about 10 percent or $1.7 million since the last rate order.
In its final rate order dated February 27, 2017, the IUB approved an
overall increase in additional annual revenue of $3.9 million. This
final order amount includes the previous temporary rate increase of $2.1
million that was implemented by Iowa American Water on May 9, 2016 as
allowed by Iowa Code § 476.6(9). Company officials say those additional
revenues will help Iowa American Water continue to invest proactively in
its water infrastructure throughout the state. Iowa American Water last
received a rate change order from the IUB in 2014.
Effective March 27, 2017, the rates approved by the IUB increased the
water service cost slightly above the interim rates put into effect on
May 9, 2016. The average residential customer using 3,870 gallons per
month will pay about $0.03 cents more per day or $1.05 more per month
bringing their average monthly water bill to $36.64.
“As a utility whose services are critical to ensuring public health, we
take our responsibility to provide quality drinking water seriously, and
as such, are committed to keeping our systems and facilities well
maintained and services,” added Moore. “Even with this increase in
rates, water service remains a good value for our customers at about a
penny a gallon.”
Customers can contact American Water's call center toll free at
1-866-641-2108 with additional questions.
Additional information can be found on the Iowa Utilities Board’s
website at www.state.ia.us/iub/.
Iowa 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 212,000
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 6,700
dedicated professionals who provide regulated and market-based drinking
water, wastewater and other related services to an estimated 15 million
people in 47 states and Ontario, Canada. More information can be found
by visiting www.amwater.com.