The Pennsylvania Public Utility Commission (PUC) recently modified water and wastewater rate changes for Pennsylvania American Water Company (PAWC) — cutting the utility’s originally requested increase by more than half while adopting a series of measures designed to enhance customer service and strengthen consumer protections.

The commission voted 4-1 to approve a motion by Chairman Steve DeFrank modifying the company’s proposed rates for water and wastewater services and adjusting the recommended return on common equity for PAWC. Vice Chair Kimberly M. Barrow issued a statement regarding her dissent, and Commissioner Kathryn L. Zerfuss issued a separate statement regarding her position on the Commission’s final decision.

PAWC, which provides water and wastewater services to approximately 810,000 customers in portions of 38 counties across the Commonwealth, including much of the Lehigh Valley, last filed for an increase in water distribution and wastewater base rates in 2023.

Smaller Than Requested Rate Changes

With this action, the commission approves an overall annual revenue increase of $74.9 million — which includes an annual revenue increase of $45,299,821 (approximately 4.75%) for PAWC’s water operations along with an annual revenue increase of $29,623,619 (approximately 14.17%) for the company’s wastewater operations. The new rates, consistent with the Commission’s Order, will take effect on and after Aug. 13.

Under PAWC’s proposal, water rates would have increased by more than $143.4 million (approximately 15%) while wastewater rates would have increased by more than $16.1 million (approximately 7.7%).

Customer Service Improvements & Consumer Protections

In addition to resolving revenue requirements, the Commission’s Order includes several measures related to customer service and consumer protections.

• Bill Discount Program: No later than Nov. 11, PAWC will implement and file an associated report with the PUC’s Bureau of Consumer Services (BCS) concerning modifications to its Bill Discount Program, including:

a. Adoption of an internal process to identify its low-income customers by initiating a screening process at the time of customer enrollment;

b. Expansion of its Customer Assistance Program enrollment within its identified low-income customer population by directing customers to the program before they enter into a Deferred Payment Arrangement or are disconnected for nonpayment; and

c. Adoption of a procedure, developed in collaboration with its low-income advisory group, under which it will offer the identified low-income customer the opportunity to apply for the Company’s Bill Discount Program and Arrearage Management Program.

• Arrearage Management Program: No later than Nov. 11, PAWC will implement, and file an associated report with BCS concerning modifications to its Arrearage Management Program, including:

a. Allowing customers to earn a monthly arrearage forgiveness credit for each complete payment the customer makes, regardless of timeliness, and apply retroactive credits to the household once it pays its in-program balance in full;

b. Expanding the monthly credit from $25 to $40 for a timely payment or for a cured missed or late payment; and

c. Providing complete arrearage forgiveness over a 24-month period.

H2O Help to Others Program

No later than Nov. 11, PAWC will implement and file an associated report with BCS concerning the specific H2O Help to Others Program screening, outreach, and enrollment procedures set forth in the Commission’s Order.

• Customer Call Center Compliance Audit: PAWC will conduct an audit of its two third-party call center contractors handling collection calls to ensure customer call center compliance with PUC regulations, make the results available to stakeholders, and submit such results as evidence in the Company’s next base rate case.

• Customer Disputes and Complaints: PAWC, working with an independent third party, will undertake a root cause analysis of customer disputes and informal and formal complaints. The analysis will help to identify complaint trends, underlying causes, and reforms or other steps undertaken to respond to these findings, sharing its plan with stakeholders before undertaking such analysis, sharing its results with stakeholders, and including these findings in its next base rate case.

• Residential Customer Bills: Within 90 days of the entry of this Order, PAWC will include language in its residential customer bills that clearly explains that American Water Resources is unaffiliated with Pennsylvania-American Water Company. Pennsylvania-American Water Company will notify the Commission once this directive has been completed.