State municipal utilities face increasing costs
PARKERSBURG – Parkersburg isn’t the only area facing the need for increased water and sewer rates.
A proposed increase in area sewer rates by the Parkersburg Utility Board remains under consideration by City Council’s Public Works Committee. Utility board officials have said issues with costs and revenues have created the need for increased rates.
At least one council member has voiced concerns over the increase, saying that while he understands the need to raise revenue, he believes the increase is too much for residents in this economy.
But state and local officials say those increased rates are not uncommon. Throughout West Virginia and even nationally utilities are looking at ways to raise revenue without harming customers.
Susan Small, a spokesperson for the Public Service Commission of West Virginia, said rate increase requests from public utilities are a common occurrence. The commission does not oversee most municipalities, such as Parkersburg, but can intervene if there are sufficient complaints or allegations of discrimination.
For public utilities, however, such as American Water in Fayettville, the commission may be called upon to approve rates or to decide if a rate increase falls outside of rules and regulations.
Small said water and sewer rate increases are fairly common as utilities struggle to keep up with increasing costs and aging infrastructure.
“Aging infrastructure is an especially common problem,” she said. “It’s not just a local issue, it is something the whole country is facing.”
In many cases pipes put in the ground 100 or more years ago are still in use, well beyond their expected lifespan, she said. A failure in a stormwater system or sewer pipe can have disastrous consequences, such as damage to a road or building, beyond just the cost to dig up and replace parts of the system.
“Part of our storm system is well over a century old in some parts of the city,” said Parkersburg Mayor Bob Newell. “The same goes with the water and sewer system, and absolutely those will have to be replaced at some point.”
As mayor, Newell is the chairman of the Parkersburg Utility Board, and says finding a way to raise money without the increased cost being too much for customers is a delicate balancing act.
“There is a debt ratio they have to be careful of,” Newell said. “That really is the only time they come back for a rate increase.”
Small said most utilities must borrow money to make repairs and improvements on existing systems. Under state law those debts must be covered by the fees charged to customers.
“The commission wants the utilities to provide services at a reasonable rate for the customers,” she said. “At the same time they have to be planning ahead for those bonds. They have to be able to cover their costs. Debt service is something that is considered when they set their rates.
“So if a utility is borrowing money to pay for expansion or improvements, those higher interest rates would have to be factored in to their billing.”
The last sewer rate increase in Parkersburg was approved in 2004, and the final step of that increase was put into place in 2008. In 2010 members of Parkersburg City Council approved a three-year water rate increase. Beginning July 1, 2010, customers saw an increase of $6.13. July 2011, a second $3.25 increase kicked in. In 2012, the rate went up $1.80.
This year’s proposal would increase sewer rates from $14.35 to $18.63 in annual increments over the next four years to help fund improvements and service. The change is about a 9 percent increase on a monthly bill for the first year and a 6 percent fee increase on monthly bills each year for the next three years.