Customers of Maryland American Water, which serves the Town of Bel Air and surrounding areas, will most likely begin receiving higher water bills this summer, but the increase won't be as much as the company wanted.
Under a compromise settlement the company agreed to last month with the Maryland Public Service Commission, which regulates private water utilities like Maryland American, and the Office of the Peoples Counsel, which represents consumers, a typical residential customer's bill is expected to increase approximately 12.95 percent from $37.53 monthly to $42.39 monthly.
As most residential customers are billed quarterly, the quarterly bill is expected to increase from $112.59 to $127.17, or by $14.20.
The company sought an increase of 19.88 percent for residential rates, 21.7 percent for commercial rates and 20.6 percent for rates charged to public facilities such as schools, hospitals and government buildings.
The settlement agreement projects the average monthly bill for a commercial customer will increase approximately 13.48 percent from $245.40 to $278.49 and projects the average monthly bill for "other public authority" facilities will increase approximately 12.07 percent from $479.52 to $537.38.
The agreement to lower the requested increase is based on an order signed by Ryan C. McLean, a PSC public utility judge, that took effect Friday and limits the company to increases that will add a projected $490,000, or 11.91 percent, to its annual revenue. The projected annual rate of return on investment with the higher rate is 10 percent.
As ordered by the utility judge, and also agreed to by Maryland American, the company will submit a depreciation study and a cost of service study as part of its next rate case.
The actual base and water usage rates the company will charge under the pending settlement still have to be presented. The agreement also requires approval from the full five-member Public Service Commission, which could modify the terms and, thus, possibly open the proceedings to a new round of hearings and proposals.
"Until the Commission reviews the settlement and renders a decision, it would not be appropriate for us to discuss the terms of the proposed settlement or to further comment on it at this time," Samantha Villegas, a Maryland American spokesperson, said.
She said the company is expecting a final PSC order in June. A spokesperson for the PSC did not return a request for comment on Tuesday.
When it filed its rate increase request with the PSC last Dec. 19, Maryland American said it needed to earn an additional $813,000 in revenue annually to meet increases in investments, labor, purchased water and waste disposal that had left it no longer able to earn a reasonable return on its investment at its existing rates. The company later revised the increase sought down to $780,627.
Maryland American, which serves approximately 4,700 residential and commercial customers in Bel Air and parts of Forest Hill and Fallston, has annual revenues of about $4.1 million, according to its PSC filings.
Mentioned in reviews of the rate filing by PSC staff and other documents was last year's sandblasting and repainting of the interior and exterior of the company's main water storage tank in downtown Bel Air, one of the expenses the company asked to recover as part of the rate increase.
"Our rate filings are historic looking, meaning, they are to recover investments already made in the system, not to cover future investments," Villegas said.
The pending rate increase does not include any costs associated with the company's plan to build a 120 million gallon reservoir just west of Bel Air on a 68.6-acre property, known as Mt. Soma, that Maryland American is buying from Harford County for $549,000.
The project, needed to provide the company with a more stable back-up water supply to its main source in Winters Run, hasn't been designed, and the company doesn't have an estimate on its construction costs, Villegas said earlier.