State regulators plan to take a closer look at a double-digit rate increase being sought by Pennsylvania American Water to cover investments in its water and sewer systems.
- The move was approved yesterday in a unanimous vote by state utility commissioners.
- As a result, the increase will be suspended for up to seven months while officials from the Pennsylvania Public Utility Commission undertake a detailed investigation.
- The process allows other parties — including customers — to weigh in on the request.
- “We look forward to a robust discussion that considers affordable access to safe water and wastewater utility service,” PUC chair Stephen DeFrank and commissioner Ralph Yanora wrote in a statement.
What’s the request: Mechanicsburg-based Pennsylvania American wants a nearly 25% rate hike for residential water customers, a roughly 27% hike for commercial water customers and a nearly 33% jump for industrial customers.
- Under the starting proposal, residential water customers using 3,201 gallons a month would see their monthly bills rise from $70.65 to $88.24.
- For commercial water customers with monthly usage of 22,094 gallons, monthly bills would increase from $346.13 to $439.77.
- For industrial customers using 685,947 gallons a month, bills would jump from $7,663.50 to $10,173.68 per month.
- Wastewater bills would generally fall. But in some areas, rates would go up slightly or remain relatively flat.
- The rate request does not include customers served by the former York city wastewater system, which Pennsylvania American bought in 2022. The system’s rates are not set to change until May 2025.
Why investigate: PUC investigations are relatively common when large utilities seek rate hikes. The process allows for a structured debate before state regulators issue a final decision.
- Pennsylvania American has said its planned investments are necessary to ensure continued safe and reliable service.
- Nonetheless, the rate request has spurred pushback from Democratic state lawmakers from northeastern PA, as well as one of Pennsylvania’s largest small-business groups, NFIB Pennsylvania.
- “Small businesses cannot afford perennial increases to their utilities,” NFIB state director Greg Moreland said in a statement last month, arguing that the proposed jump would “crush small business.”
The background: Regulators previously granted a rate increase to Pennsylvania American Water in 2022, though the hike was less than what the company sought initially.
- As part of its current proposal, the company is planning to expand its income-based discount program to include customers earning 150% to 200% of the federal poverty level, a change that would expand assistance to an estimated 55,000 customers.
- Pennsylvania American has nearly 682,000 water customers and nearly 98,000 sewer customers, including many of both in Central Pennsylvania.
