Water Rates Q & A: What you need to know.
On June 30, 2017, Missouri American Water filed an application with the Missouri Public Service Commission (MOPSC) requesting water and sewer rate increases to recover costs associated with providing reliable water and sewer service for the more than 160 communities we serve throughout the state.
The Q&A below will help you to answer questions specific to the case, and show you the PROJECTED impact to your rates based on Missouri American Water’s request.
YOUR RATES WILL NOT CHANGE UNTIL THE MISSOURI PUBLIC SERVICE COMMISSION REVIEWS AND APPROVES THE NEW RATES.
The approved rates may be different than the company’s proposed rates. Ultimately rates are set by the Missouri Public Service Commission, and their ruling will come after an extensive review of the case and opportunities for public comment.
Customers may also direct questions via email to MORateCaseInquiries@amwater.com
How will this proposed rate increase affect my monthly bill?
- The amount will vary based on the service area where you are located.
- Water rates are currently divided into three zones: Southwest (Branson Area, Joplin, Warrensburg, Sedalia, Warsaw ), East Central (Jefferson City, Mexico, St. Louis) and Northwest (Brunswick, Platte County and St. Joseph).
- Sewer rates are currently divided into two zones: Arnold is one zone. All other sewer operations are the second zone.
- This case requests a single rate for ALL water operations and two rate zones for sewer operations. This is known as consolidated rates.
Is there a way I can determine the dollar amount of the proposed increase?
Example: If you are a monthly customer and use 4,000 gallons:
Fixed Charge - $10 (5.8-inch water meter)
Usage Charge - $6.2953 x 4 equals $25.18
Total Monthly Bill - $35.18
*This is an approximate total not including taxes and fees.
What percentage and revenue increase is the company asking for?
- Statewide the company is requesting an annual revenue increase of about $75 million, or an increase of approximately 25 percent statewide, which includes all residential, commercial and industrial categories.
- The impact to customers will vary by location.
When will the rates change?
- Rates will not change until the Missouri Public Service Commission (MOPSC) completes a comprehensive review of the request. This process can take up to 11 months, and will include public hearings.
- Public hearings are scheduled by the MOPSC, and give customers an opportunity to provide comments. Rates WILL NOT change until the MOPSC approves a ruling on the case, which we expect sometime in the first half of 2018.
Why does Missouri American Water need this rate increase?
- The proposed increase is needed to recover costs for major improvements to water and sewer systems that are necessary to maintain reliable service.
- The moneys spent on these are NOT reflected in current rates. Statewide approximately $490 million has been or will be invested in these improvements.
- This investment includes 138 miles of aging water mains,, as well as valves, service lines and other parts of the more than 6,700-mile network of water and sewer pipes.
The rate increase is to recover expenses for investments in Missouri American Water’s water and sewer systems. When did Missouri American Water make these improvements that are the main reason for the rate change request?
- We are seeking to recover costs from improvements made from February 2016 to May 2019. This covers costs for projects that will be in operation by December 2017, and some projects that we are planning to complete by May 2019.
- This request is different from past requests because historically we have only requested that the MOPSC address improvements that are finished and in service.
- We are asking the MOPSC to include future planned projects in addition to finished ones to allow the company to better plan for expenses.
- Planned projects with costs collected in advance would be reviewed by the MOPSC the same as completed projects to make sure they are necessary and prudently constructed.
- The practice of cost recovery for future projects is commonplace in utilities across the U.S.
When was the last time Missouri American Water adjusted water and sewer rates?
- July 2016 was the last time rates were adjusted. Depending on the location, residential rates either increased or decreased at that time.
- Rates determined from this case are not expected to go into effect until the first half of 2018.
The last rate change took place in July 2016. Why do you need to ask for an increase so soon?
- Missouri American Water’s frequency of rate requests is driven by the needed improvements we have made and have planned to make to upgrade and maintain plants, pipes, pumps, storage tanks and other parts of the water and sewer systems.
- The need to improve water and sewer systems in a national challenge. The American Society of Civil Engineers recently stated an estimated $1 trillion of investment is needed across the nation over the next 25 years in water system investments, and an estimated $271 billion in sewer system investments. Increasing regulations and water quality standards continue to contribute to increases in costs for service nationwide.
- Making needed improvements now saves money in the long run by making sure our systems don’t fall into serious disrepair.
Is the request the same for all operations in the state?
- Yes. We believe all customers in the state in the same rate category should receive the same service and pay the same rates. This is common in both the gas and electric industries.
- This creates economies of scale, meaning that investment costs can be spread among a large group of customers, minimizing rate shock.
Why do some municipal systems have water and/or sewer rates that are less than Missouri American Water?
- Our rates are regulated and set by the MOPSC. We work hard to keep rates down, but we have to balance that objective with the need for significant capital investment to ensure that our systems continue to meet all state and federal standards.
- Although the rates charged by some other systems might be less, the gap is often due to the difference in capital investment. In many cases, water and sewer systems with rates significantly lower than Missouri American Water’s have not made adequate investment in the infrastructure. We make capital investments to ensure quality, reliable water and sewer service. Our approach is to proactively make system investments to improve reliability and resiliency, while reducing the risk of serious service issues or water quality problems.
- Municipalities also do not pay local property taxes, which we do. Our annual cost for property taxes in 2017 will be nearly $20 million.
How can Missouri American Water ask for higher rates at this time when many families are struggling financially?
- There is never a good time for ask for a rate increase.
- Missouri American Water has a responsibility to properly maintain and upgrade our systems to ensure quality, reliable water service and fire protection for the communities we serve.
- This requires significant capital investment, which totals approximately $490 million through May 2019. We believe it is only fair that we are able to recover the costs for these prudent and necessary investments.
Do you offer any assistance programs for customers needing assistance to pay water bills?
- For those families who are struggling to pay their bills, assistance is available through our H2O Help to Others Program (more information available at: https://amwater.com/moaw/customer-service-billing/low-income-program).
- The program’s funding comes from a corporate match of up to $160,000 per year. Customers can also donate.
- There is also a Low-Income Tariff currently available for customers in our Northwest Operations of Brunswick, Platte County and St. Joseph. Customers that are eligible for utility assistance through LIHEAP (Low Income Home Energy Assistance Program) in these locations are also eligible for a reduced customer charge on their water bill.
- Missouri American Water is asking the MOPSC to expand this low-income program statewide as part of the current rate case.
What is Missouri American Water doing to control costs?
- Missouri American Water employs best management practices and cost containment techniques, while taking advantage of economies of scale to enhance efficiencies and reduce operational costs.
- Missouri American Water’s rates are based on the actual cost of providing water service. We work hard to control our costs and operate as efficiently as possible to keep rate increases as minimal as possible.
LEARN MORE ABOUT THE RATE MAKING PROCESS