The company that supplies water to Alexandria appears to be using faulty data to justify a 17 percent rate increase in the city, Alexandria city staff said.
Virginia American Water is asking the state to approve a rate increase that would raise the average water bill in Alexandria and Prince William County by 16 to 17 percent, citing higher water treatment, water delivery and infrastructure costs.
City staff agreed that the $10 million in infrastructure investment the company has made since 2003 — the year of its last rate increase — warrants a slight new increase.
But after conducting their own analysis of the state documents filed by the company, Alexandria officials found that Virginia American Water said that its number of customer meter billings dropped by 505 between 2003 and 2006, and it needs to make up the revenue.
“They’re covering a lot of fixed costs — the way the rate system works, it’s to their advantage to show they have fewer customers and less water used,” Deputy City Manager Mark Jinks said.
“But it’s counterintuitive that the number of customers would be down — we’ve clearly added more residents to the city every single year for the last decade,” he said.
Alexandria’s population grew by 8,051 people between 2003 and 2006, according to the U.S. Census Bureau.
A spokeswoman for Virginia American said the company arrived at its number by counting its water meter readings, and that vacant houses or offices could contribute to the drop.
Virginia American Water is the city’s only water supplier.
The city has consistently filed formal comments with the Virginia State Corporation Commission, the agency that regulates utilities, challenging the company’s rate increase requests.
In 2003, the company asked for an increase of 8.15 percent, but the state approved 3.5 percent.
In 2000, the company requested a 5.21 percent increase and won 2.97 percent.
In a memo to the City Council, city staff speculated that the company, which is owned by German-based RWE, is asking for the dramatic rate increase to raise revenue before RWE spins American Water off into its own company — a move RWE has said it is planning.
“The higher the returns to the water company are, the higher the stock offering price could be,” the memo said.
The state’s public hearing on the increase is scheduled for Sept. 11, but the rate increase is set to go into effect July 8. If the state finds the increase is unwarranted, customers will be refunded the extra money, plus interest.
