New Rates Effective May 2018

What You Need to Know.

On May 2, 2018 following an 11-month review of Missouri American Water’s rate change request, the Missouri Public Service Commission (MoPSC) issued a final order in the rate case filed on June 30, 2017. This order did not address water and wastewater rate adjustments by operation. On May 15, 2018, the MoPSC approved the rate adjustments by district. 

The Commission ordered two rate groups for water – one being customers in St. Louis County, and the other being customers in all other Missouri American operations in the state. 

For our wastewater customers in Arnold, they will remain on their own rates. Customers outside of Arnold will see two rate groups.

When was the rate change request filed?

  • The rate change request was filed at the Missouri Public Service Commission on June 30, 2017.

Why is a rate increase necessary?Key drivers of this rate change are:

  • Investments of more than $250 million in water and sewer system improvements are the main drivers in the request. Ongoing investments in water and sewer system improvements are necessary to continue reliable service.
  • Periodic rate adjustments are needed to cover the cost of providing high-quality, reliable water and wastewater service. (fuel, power etc….).
  • Many miles of aging water main were replaced, as well as valves, service lines and other parts of the more than 6,700-mile network of water and sewer pipes.

Unlike government owned utilities, Missouri American Water cannot adjust rates on its own.The company must request MoPSC approval for any change in water and/or wastewater rates.

Did the tax change impact this request?

  • Yes. The revenue requirement request by Missouri American Water reflects an $18 million reduction in the federal income tax due to the enactment of the Tax Cuts and Jobs Act (the “TCJA”).

When will new rates go into effect?

  • Water rates will go into effect on May 28.
  • Sewer rates will go into effect on May 28.

When was the last time water/wastewater rates changed?

  • July 2016 was the last time rates were adjusted.

What about the low-income assistance program that was a pilot program from the previous rate case?

  • The program still exists for our Northwest Operations ONLY. This includes Brunswick, Platte County and St. Joseph.
  • The MoPSC did not extend this program to other parts of the state.

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 cost for property taxes in 2017 was approximately $20 million.

How will this rate change affect my monthly bill?

  • The amount will vary based on the service area where you are located.
  • Water rates are currently divided into two zones: one is for all customers in St. Louis, and the second is for customers in all other Missouri American operations in the state.
  • Sewer rates are currently divided into two zones: Arnold is one zone. Customers outside of Arnold will see two rate groups.
  • Below are charts reflecting the rate changes. Costs are divided by a customer charge (a, fixed charge) and usage charge. The customer charge is the same every month, while the unit charge varies according to the amount of usage.