The Fayette Tribune, Oak Hill, W.Va.

December 24, 2012

Mayor, residents ‘shocked’ by proposed rate increase

By C.V. Moore
Register-Herald Reporter

FAYETTEVILLE — Fayetteville’s mayor says he is “shocked” at West Virginia American Water’s proposed 81 percent sewer rate increase for the town, and plans to meet with the company to discuss the issue.

“To me it’s outrageous. I don’t know how they expect people to afford that,” says Mayor Jim Akers. “It just came out of the clear blue to us. I don’t know how they justify it.”

The company has filed a rate increase request with the West Virginia Public Service Commission (PSC) that would raise the average monthly sewer bill from $35.78 to $65.81. This is the first rate increase request since 2008.

Residents like Robert O’Dell are worried about what this will mean for those with fixed or modest incomes.

“With high electric bills typically over $100 a month or more and now with water rates and then a higher sewer rate, this will easily break the backs of people who have limited incomes in Fayette County,” he said.

Fayetteville sold its water and sewer utilities to West Virginia American Water (WVAW) for $3.9 million in 2008, after 86 percent of residents voted to approve the agreement.

At the time, Akers said WVAW “lived up to its promises” and called the company “a great partner and friend to this community.”

The justification of the sale was that the systems were “in need of substantial upgrades and replacement.” The system had ongoing overflow and backup problems.

The town had violated environmental regulations and consent orders issued by the West Virginia Department of Environmental Protection (WVDEP) numerous times.

In order to upgrade the wastewater system to be in compliance with the law, the town would have had to “enact a significant increase in wastewater rates,” according to a 2008 PSC filing by the town and the company.

West Virginia American has brought the sewer system into compliance.

The sales contract states that WVAW will not raise sewer rates for two years and that it will invest up to $1.5 million in the system, including a five-year annual investment of up to $350,000 for water main and hydrant replacement and wastewater main replacement.

WVAW says it invested $682,000 into the system between 2008 and 2011 and “will continue to evaluate the system’s operations and capital improvement needs, keeping in mind the system’s relatively small customer base and the impact of system investment on customer rates.”

“In 2012, we’ve invested another approximately $300,000 in capital improvements, which brings it close to $1 million of total investment for this wastewater system serving 1,100 customers since 2008,” said WVAW spokesperson Laura Jordan. “We will continue to look at our contractual obligations and the needs of the system to determine future capital improvement needs.”

Akers says he’s having attorneys review the sales agreement because he believes the water company hasn’t followed through on all of its promises, including notifying the town of any improvements being made to the system.

“What they told us and promised us, I don’t feel like a lot of that has been done. It doesn’t justify the increase to me,” said Akers.

He plans to meet with the company and says the town will be “taking a hard look” at this issue.

According to the company, upgrades so far have included a system-wide mapping project; permanent flow meters to identify and address inflow and infiltration sources; online monitoring equipment; a new augur for sludge transfer; variable frequency drives on air blowers and pumps at the treatment plant; and other repairs and replacements to the collection system.

WVAW said the investments have “considerably improved” the sewer system and were necessary to modernize, comply with environmental laws and “maintain service levels and the system’s overall operations.”

Fayetteville received the “Most Improved” sewage treatment plant award from the DEP in 2011.

Town Superintendent Bill Lanham says the dramatic requested rate increase could be partly the result of a small customer base for the sewer system — 1,100 customers. But he and Akers say they haven’t seen the company make an effort to extend the system to more residents who need it.

“One of the things we’ve asked before is providing additional sewer customers in the town of Fayetteville is important to us. People who have failing septic systems should be a priority,” says Lanham.

“There are a lot of sewer needs we’ve seen in our community and we want to see more investment along those lines.”

Virginia Price, owner of Sedona Grill, a Fayetteville restaurant that closed last year, partly blamed the insolvency of the business on a lack of sewer hookup.

So if the systems had stayed under government ownership, would residents be paying more or less than the proposed rate increase?

Lanham says that’s “a tough one to call,” but Akers feels confident that customer bills “wouldn’t be near that.”

“Probably about a 10 to 15 percent increase over a five-year period, that would be my guess. That’s maintaining the system as it was, not increasing the customer base,” he said.

Nevertheless, both men defend the decision to sell and believe it was the right choice.

“Our water and sewer system were barely staying afloat,” said Akers. “We would either have to increase rates or float more bonds, and I didn’t want to borrow any more money. It just kept getting worse and worse. It could be in trouble if we hadn’t sold the system.”

Akers says the water company did not want the wastewater plant at the time of the negotiations, but the town in insisted that if it was to purchase the water utility, they would have to take the sewer along with it. The Fayetteville Wastewater Treatment Plant is WVAW’s only wastewater facility.

Fewer and fewer municipalities in West Virginia are choosing to maintain their own independent water and sewer systems because of the major investments required to maintain aging infrastructure. Depopulation and an increasing scarcity of grant funding for such projects means it can be hard to find a means to pay.

WVAW has entered into “public-private partnerships” with a number of public service districts (PSD) in the state. The company agreed to take over operation and maintenance of the systems if the PSDs would raise public money for projects. Now, the PSDs say the company has withdrawn its financial commitments, citing a lack of investment capital. A complaint was filed against the company and the case is currently before the Public Service Commission.

The PSC has 300 days to review WVAW’s rate increase request. Any new rates would not be effective prior to Oct. 10, 2013.

“I just hope that enough citizens speak out against this and that the PSC denies that rate increase,” said O’Dell. “It’s just so ridiculous.”

— E-mail: cmoore@register-herald.com