Loss of ISRS: Bad for Customers

The Infrastructure System Replacement Surcharge (ISRS) is an important program that benefits customers by funding the efficient replacement of aging water pipes.

Missouri American Water has replaced nearly 2 million feet of old pipe in St. Louis County through a small surcharge on customers’ bills (about $3.09 per month for a typical residential customer).  Replacing old, brittle pipe is important for preventing water main breaks so our system remains safe and reliable.  Pipe replacement is as much as 10x more cost effective than repairing broken mains. It’s also more convenient for customers because main replacement can be scheduled in advance rather than waiting for an unexpected failure impacting homes, closing schools and businesses and disrupting traffic.

Unfortunately, Missouri American Water had to stop its ISRS pipe replacement program because of a population-based technicality. The ISRS law was written to apply to counties with more than 1 million residents, which originally included St. Louis County. However, in the 2010 census the population of the country dropped just below 1 million residents, and a lawsuit filed by the Office of Public Council (OPC) forced us to cease the ISRS fee.

The lack of ISRS funding limits our ability to proactively replace aging and troublesome mains and will result in more main breaks and more frustration for our customers. If you notice more main breaks in your community, please know that Missouri American Water is working hard to maintain the 4,200 miles of water mains and 31,000 fire hydrants in St. Louis County despite this challenge. We thank you for your patience.

For more information, please review the Q/A below:

- What is ISRS?
The Infrastructure System Replacement Surcharge (ISRS) was a small fee, about $3.09 per month for a typical residential customer, that funded Missouri American Water’s scheduled main replacement program in St. Louis County. Using the proceeds from this fee, we identified and proactively replaced aging water mains throughout the county before they broke and inconvenienced our customers.

- Why was ISRS canceled?
Missouri American Water’s ability to charge ISRS was based on legislation allowing the fee to be collected by water companies operating in counties with more than 1 million residents. The only county in Missouri that has ever reached that population was St. Louis County, but as of the 2010 U.S. census, the population of St. Louis County fell just short of 1 million residents. The Office of Public Council (OPC) used the population technicality to sue, claiming we could no longer charge the fee. The courts found in OPC’s favor and Missouri American Water stopped collecting the fee earlier this year. It’s important to note that this ruling has the potential to impact all population-based legislation, including legislation that benefits local school, fire and hospital districts. We have asked the Missouri Supreme Court to review this ruling, and we will continue pursuing legal and legislative remedies to restore ISRS.

- Why should I care that it was canceled?
It comes down to cost and convenience for customers. The lack of ISRS funding limits our ability to proactively replace aging and troublesome mains and will result in more main breaks and more frustration for our customers. Instead of being able to schedule a main replacement before it breaks, alerting impacted customers to the disruption in advance, our budget limits us to repairing mains as they break. This will keep the water running for our customers, but is inefficient because repairing a broken water main can cost 10x more than simply replacing an old main before it breaks.

- Won’t I save money because this program is canceled? It’s one less fee I have to pay.
In the short-term, sure. But at what future cost?  Like any infrastructure, water mains eventually break down and need to be replaced, and that cost is eventually collected through the rate-setting process. By using ISRS, Missouri American Water minimized the cost of water main replacement by identifying old and troubled water mains and replacing them before their breaking could create additional costs. As mentioned above, repairing a broken water main can be 10x more expensive than replacing it before it breaks. So while residential customers will, in the short term, save the $3.09 average monthly fee that ISRS cost them, in the long term, the costs will be rolled into base rates at a much higher level. In addition to higher costs, customers will have to deal with the headache of more frequent service disruptions to homes, schools, businesses and traffic due to main breaks.

- What can customers do to help bring ISRS back? 
Customers who want to keep their Missouri American Water bill as low as possible can contact their state legislators to share their support for ISRS.  http://www.senate.mo.gov/LegisLookup/Default.aspx