Virginia American Water Announces New Rates in Effect Under Bond, Pending SCC Approval

Water service cost remains at about a penny per gallon; Operations
expenses decreased by about 2 percent since last rate case

ALEXANDRIA, Va.–(BUSINESS WIRE)–Virginia American Water announced today new rates went into effect April
1, under bond, for all of its customers. A general rate case application
was filed with the State Corporation Commission (SCC) in October of
2015. After a thorough review of the filing, the SCC will issue a Final
Order determining the company’s rates. Refunds will be issued if the
Order is lower than the request.

In the filing, Virginia American Water requested an increase in total
revenues of approximately $8.69 million, seeking recovery of additional
system investments of approximately $53 million, including the
acquisition of the Dale Services Wastewater System, since approval of
the company’s last rate case filed in 2012.

“This case is all about investments in infrastructure,” says Virginia
American Water President Barry Suits. “We have been successful over the
last four years to control our operations costs due to investments in
technology and improved work processes. In fact, operations expenses
have actually decreased by about 2 percent since the last rate
case. These savings offset some of the revenue requirement requested for
capital improvements in this case.”

In its oldest service area, the City of Alexandria, Virginia American
Water has been replacing three miles of water mains per year. Elsewhere,
infrastructure investments include a one million-gallon storage tank
rehabilitation in Prince William in 2013 and replacement of a
2.5-million-gallon clearwell in Hopewell in 2014.

The rate request affects all customers in the company’s Alexandria,
Hopewell, Prince William and Eastern District service areas. Rates for
Virginia American Water’s residential customers have changed as follows:

  • In Alexandria – About a four dollar increase per month for the typical
    residential customer using 4,500 gallons per month.
  • In Hopewell – About a nine dollar increase per month for the typical
    residential customer using 4,500 gallons per month.
  • In Prince William –

    • For water customers, an increase of approximately eight dollars
      per month for the typical residential customer using 5,200 gallons
      per month.
    • For wastewater customers, the rate has changed from a flat rate of
      $101.65 per quarter (about $33.85/month) to a volumetric rate of
      approximately $39.56 per month for 5,200 gallons per month.
    • For both water and wastewater customers, billing is now monthly,
      as it is in the Alexandria and Hopewell service areas already.
    • In addition, water and wastewater bills are now integrated, and
      mailed together on one bill, rather than billed separately. This
      is enabled by the completion of the migration of its wastewater
      customers (from the 2013 acquisition of Dale Service Corporation)
      into Virginia American Water’s billing software.
  • Eastern – An increase of about twenty-nine dollars every two months
    for the typical residential customer using 6,000 gallons every two
    months.

For all districts, Virginia American Water has also requested a Water
and Wastewater Infrastructure Service Charge, which if granted, would
not be included in customer’s bills until after the Final Order is
issued. Incremental annual increases in monthly bills are not to exceed
10 percent in total over multiple years between rate cases. This will
enable ongoing investments to sustain replacement of critical
infrastructure, and decrease the need for more frequent rate increases.

Suits said that even with the new rate increase the proposed cost of
water service in all four Virginia American Water districts would remain
at about one penny per gallon.

“The regulatory process for rate setting is fully transparent and
incredibly rigorous. It considers the needs of the customer as well as
the company’s ability to continue to reinvest in the infrastructure to
deliver high-quality water service,” said Suits. “We have consistently
met or surpassed all drinking water quality standards and nutrient
discharge standards established by the United States Environmental
Protection Agency, the Virginia Department of Environmental Quality, and
the Virginia Department of Health, and we remain committed to providing
quality water and wastewater service in all aspects of operations.”

The SCC has scheduled a public hearing to receive input on June 21,
2016, at 10 am, in the Commission’s Second Floor Courtroom in Richmond.
For more information, customers can contact Virginia American Water’s
customer service center at 1-800-452-6863.

About Virginia American Water

Virginia American Water, a subsidiary of American Water (NYSE: AWK), is
the largest investor-owned water utility in the state, providing
high-quality and reliable water services to approximately 350,000
people. Founded in 1886, American Water is the largest publicly traded
U.S. water and wastewater utility company. Marking its 130th anniversary
this year, the company employs more than 6,700 dedicated professionals
who provide regulated and market-based drinking water, wastewater and
other related services to an estimated 15 million people in 47 states
and Ontario, Canada. More information can be found at www.amwater.com.

Contacts

Virginia American Water
Samantha Villegas, 571-577-7477
samantha@savipr.com