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Press release from Business Wire

West Virginia American Water Files General Rate Case Requests

<p class='bwalignc'> <i>Approximately $85 million in capital investments drives request for water rate increase; Maintains reasonable cost for water service at about a penny per gallon</i> </p>

Friday, December 14, 2012

West Virginia American Water Files General Rate Case Requests17:02 EST Friday, December 14, 2012 CHARLESTON, W.Va. (Business Wire) -- West Virginia American Water filed an application today with the Public Service Commission of West Virginia (PSC) requesting a general rate increase. The main driver in this request is the approximately $85 million of system improvements since 2009, which is the year on which customers' current rates are based. These capital investments, which include upgrades to the water distribution system, water treatment facilities, storage tanks, pumping stations and computer systems, are necessary to enhance customer service and maintain water quality, service reliability and fire protection for approximately one-third of the state's population served by West Virginia American Water. If granted in full, the company's request would increase water service rates by approximately $8.13 a month for a typical residential customer – bringing the average monthly residential bill, based on 3,315 gallons of usage, from $39.11 to $47.24. Even with this proposed increase, the cost of tap water would remain approximately one cent per gallon. “This rate request is driven by the prudent and necessary capital investments that we've made to maintain and upgrade our infrastructure, and to ensure that our drinking water continues to meet all quality standards established by the U.S. Environmental Protection Agency and the West Virginia Bureau for Public Health,” McIntyre said. “We believe it is more cost-effective in the long run – and therefore better for our customers – to proactively make needed system improvements,” said McIntyre. “This includes not only the physical infrastructure under the ground that keeps the water running, but also the ‘soft' infrastructure such as critical computer systems that are necessary to keep the business running – much like the state of West Virginia's recent investment in an Enterprise Resource Planning or ERP computer system, which was announced by the governor last year.” McIntyre stated that West Virginia American Water's rates are based on the true cost of providing water service. These costs include capital investments to replace and upgrade facilities and systems, operational costs like chemicals, fuel and power, employee compensation, as well as the usual taxes that businesses must pay. “We work very diligently to keep expenses and rates down, but we have to balance that objective with the costs associated with stricter state and federal requirements as well as aging infrastructure,” he said. The PSC will conduct an extensive review of West Virginia American Water's rate application and will have up to 300 days to review the filing. Any new rates established by the PSC in this case would not be effective prior to Oct. 10, 2013. If the PSC were to grant the entire request, the typical West Virginia American Water residential customer would receive a day's worth of water for approximately $1.57. “This means we would still deliver quality, reliable water service to our customers at the reasonable cost of about one penny per gallon,” said McIntyre. West Virginia American Water is seeking a total annual revenue increase of approximately $24 million or 19.7 percent. The company is also requesting a rate increase for wastewater customers. West Virginia American Water owns one wastewater system in Fayetteville and has not requested a rate increase for this system since its acquisition in 2008. The company invested $682,000 in infrastructure improvements between 2008 and 2011 to bring this troubled system into regulatory compliance. As a testament to this work, the Fayetteville Wastewater Treatment Plant received the “Most Improved” sewage treatment plant award from the West Virginia Department of Environmental Protection in 2011. If the request is granted in full, wastewater rates would increase the average residential monthly sewer bill by 81 percent from $35.78 to $65.81. West Virginia American Water, a subsidiary of American Water (NYSE: AWK), is the largest water utility in the state, providing high-quality and reliable water services to approximately 600,000 people. Founded in 1886, American Water is the largest publicly traded U.S. water and wastewater utility company. With headquarters in Voorhees, N.J., the company employs approximately 7,000 dedicated professionals who provide drinking water, wastewater and other related services to an estimated 15 million people in more than 30 states, as well as parts of Canada. More information can be found by visiting www.westvirginiaamwater.com.Connect with us: Facebook.com/wvamwater, Twitter.com/wvamwater, YouTube.com/wvamwater West Virginia American WaterLaura Jordan, External Affairs ManagerOffice: 304-340-2089Mobile: 304-932-7158Laura.Jordan@amwater.comwww.westvirginiaamwater.com