Customers of Maryland American Water Company, the supplier of drinking water to the Town of Bel Air and some nearby areas, will have an opportunity to comment next week on the company’s request for a major rate increase.
A public comment hearing on the rate increase will be held on Monday, Oct. 22, at the Harford County Council’s chambers, 212 S. Bond St. in Bel Air, beginning at 7 p.m.
The company, which serves about 5,000 residential, business and institutional customers, filed its petition for the rate increase with the Maryland Public Service Commission in late June, citing the impending completion of a water storage impoundment reservoir as the main factor in the request.
According to its website, “Maryland American Water Company filed an application with with the Public Service Commission of Maryland for authority to increase its operating revenue by $1,837,688, an overall rate of return of 7.53%, and $15.4 million of utility plant additions for the Bel Air impoundment and other projects.”
If the full requested increase, which is subject to Public Service Commission approval, is granted, the average residential customer’s monthly bill will increase from about $42 to approximately $57.50 monthly, almost 37 percent rise, a Maryland American spokesperson said in June. A typical residential customer uses about 3,800 gallons of water monthly, according to the company.
The company’s last rate adjustment was in June 2015 and before that, in 2009.
“Customer input is a critical aspect of the rate-adjustment process, and we look forward to hearing directly from our customers on Monday,” Alison Bibb-Carson, the company’s external affairs manager, said via email Tuesday.
Bel Air town officials have been following the rate increase proceedings closely, going so far during the summer to remind residents that the water company is a private business, publicly traded, and the town, which itself is a customer, has no control over Maryland-American’s rates.
The town government did, however, actively support the construction of the reservoir on the west bank of Winters Run— the water company’s supply source — as a means to free the town from a building moratorium imposed by the Maryland Department of the Environment in 2013 over concerns the water company did not have adequate supply reserves to support new development.
In July, the town government, through its lawyers, filed a petition this summer to intervene in the rate case, stating that the increase would have “significant impact” on the town and its residents, and Town Administrator Jesse Bane gave testimony to the PSC in early September, according to the PSC Case No. 9487 file, which can be viewed online at www.psc.state.md.us.
“Knowing the cost of building the impoundment would mean an increase in water rates and not knowing when those increases would take effect, the Town made every attempt in its fiscal planning to lessen the impact of an increase by holding the line on its property tax rates since 2016 in spite of an increased demand for services,” Bane testified. “As a result of significant measures taken in 2017 to reduce its use of water and estimate projections of water rate increases into the future, the Town is not planning any tax increase for FY20 specifically to cover those increased costs.”
“The Town is also willing to cooperate with the MAWC to implement Economic Development Revenue Bonds, making available tax-exempt financing that would result in a significant savings not available from conventional loans,” Bane’s testimony continued. “Finally, the Town is planning to provide public information presentations to the users of MAWC to assist in any plans they may have to cut the costs of water usage as a result of an increase in their water rates.”
Bane acknowledged that the town government and community in general supported construction of the reservoir as the only viable alternative to end the building moratorium, realizing that water rates would eventually increase as a result.
But his testimony stopped far short of supporting the increase as filed by the water company, saying the town would rely on the Office of the Peoples Counsel, which represents consumers in such matters, as well as “other experts” to represent the town’s interests.
“It is the position of the Town that, no matter what the decision of the Maryland Public Service Commission, the new rates will have a significant impact on the consumers of Maryland American's water,” Bane testified, citing statistics on the number of renters and senior citizens in the town, giving it a “less wealthy population” when compared to the greater Bel Air area, Harford County and the Baltimore region.
“MAWC should be entitled to a return on its investment that is fair and reasonable and we leave it to the Public Service Commission and the People's Counsel to perform that analysis,” he said. “That said, the rate of increase requested is much higher than we would have expected.”
Bane requested that consideration be given “to allow [Bel Air’s] citizens and businesses time to adjust to the increase.
“It is the request of the Town that the Maryland Public Service Commission provide that the increase be phased in over a period of three to five years,” he testified.
“ … the suggested rate increase, or any rate increase of a high percentage, will present a hardship for many we represent. While I can appreciate the efforts of Maryland American Water Company to maintain the affordability of its service for its customers, it may not be enough for all.”
Bane said again Monday night that the town government remains concerned about the amount of the rate increase and the impact if would have on town residents if the PSC allows it to go in effect all at once.
When it filed the rate increase request, MAWC said 95 percent of the additional revenue generated would be going to recoupment of the reservoir-related costs.
The company said its new 90 million gallon impoundment/reservoir and intake, being constructed on the Mt. Soma property, which the company acquired from Harford County, will cost approximately $15.4 million, about $6.3 million less than originally estimated.
Bibb-Carson, the Maryland American spokesperson, said they lost a few weeks of construction on the impoundment “due to the heavy rains the region experienced this summer.”
“The installation of the geomembrane liner is nearly complete, and it's our goal to start filling the impoundment with raw water from Winters Run within the coming weeks,” she said. “It takes a couple of weeks to fill the impoundment -- depending upon stream flows.”
Once placed into service, the 11.2-acre impoundment will provide approximately 1 million gallons per day of additional water supply, the company said earlier.
MAWC customer rates have several components: a capacity charge, usage charge and base rate. According to the company, the capacity charge, currently 76.04 cents per 1,000 gallons would increase almost 54 percent, while the usage charge, currently 10.21 cents per $100 gallons, would decrease almost 11 percent. Base rates, which are based on meter size, would increase by 7.5 to 19 percent, with the residential customer at the lower end of that scale, all depending on PSC approval.