Office of the Ohio Consumers' Counsel

Water Industry

Residential customers of Ohio’s investor-owned water utilities once again faced rate increase proposals in 2006. The cases involved small companies like Mohawk Utilities and Tomahawk Utilities and larger companies like Aqua Ohio and Ohio American Water. As the state’s residential utility consumer advocate, the Office of the Ohio Consumers’ Counsel (OCC) both monitored and participated in these rate cases before the Public Utilities Commission of Ohio (PUCO) to ensure consumers were receiving quality water and service at reasonable rates. The OCC took an approach to analyze and monitor small rate increase requests from Mohawk, Tomahawk and Aqua Ohio to ensure the adjustments were justified and reasonable. The request from Ohio American Water in April required further action to be taken by the OCC.

The rate increase request by Ohio American Water was the subject of public outcry throughout 2006. Customers formed a coalition and objected to the rate increases along with the OCC. The quality of water service, as well as the amount and frequency of the increases, has been a major concern of the OCC and Ohio American Water’s residential customers over the past several years.

The OCC opposed Ohio American Water’s request because another increase would cause undue hardships on some residential customers. To reflect the poor quality of water received by some of the company’s customers, the OCC called for a reduction in the earnings of the company’s shareholders and requested that the PUCO take further action so the company remedies the problems.

Ohio American Water rate increase

The Office of the Ohio Consumers’ Counsel (OCC) achieved a major victory to get improved water quality and service for customers of Ohio American Water. The OCC and the staff of the Public Utilities Commission of Ohio (PUCO) reached an agreement with Ohio American Water in early January 2007 that will require the company to take aggressive measures to make improvements. The agreement was still pending approval by the PUCO Commissioners in February.

The OCC listened carefully to the concerns raised by consumers during five public hearings and made sure Ohio American Water was held responsible for addressing the issues that were raised. Targeted steps were developed by the OCC, Ohio EPA and the PUCO staff that Ohio American Water will use to remedy the discolored water in the Huber Ridge community in Columbus, Ohio. The company will have six months to remedy the problem or face significant penalties. All fines levied against the company will be credited back to consumers. Additionally, Ohio American Water will not be allowed to seek any further rate increases until the discolored water is resolved.

The agreement also required Ohio American Water to address water softening issues in the Lake Darby community in Columbus, Ohio. The water supplied by Ohio American Water will be softened according to standards established by the Environmental Protection Agency. If those standards are not met, penalties will be assessed to Ohio American Water and credited back to Lake Darby customers.

Ohio American Water also will make commitments to resolve quality of service issues throughout its service territories including keeping unaccounted water levels at or below 15 percent, meter reading standards under the law, maintaining and operating its valves, inspecting tanks and flushing and painting hydrants. If Ohio American Water fails to meet these commitments it will face monetary penalties which will be flowed back to customers as bill credits.

As a result of the pending agreement, Ohio American Water customers will pay less than what the company originally proposed. Water rates will increase 14 percent in Franklin and Portage counties, while sewer rates will increase 5 percent. Water rates will increase 11.7 percent for customers in Ohio American Water’s traditional service territory which includes portions of Ashtabula, Lawrence, Marion, Morrow, Pike, Preble, Richland and Seneca counties. The agreement also outlines increases for miscellaneous charges including account activation, customer and reconnection charges.

The company originally asked for residential water rates to increase 21.96 percent for residential customers in Franklin and Portage counties. Ohio American Water also sought a 14.31 percent increase in water rates for its traditional service territory.

— Case 06-433-WS-AIR

Mohawk Utilities rate increase

The Office of the Ohio Consumers’ Counsel made certain that customers of Mohawk Utilities continued to receive the consumer protections to which they are entitled when the company requested to increase water rates. Mohawk Utilities asked the Public Utilities Commission of Ohio (PUCO) in August 2005 to approve an increase to its rates and to maintain flat monthly prices for customers even though it had installed water meters. The PUCO staff had recommended a more usage-based billing system and the OCC. In April, the company and the PUCO staff came to an agreement to allow Mohawk to increase its rates by 6.5 percent. In addition, the company changed its rate structure so a portion of the rates would be based upon the amount of water used instead of a flat monthly fee. Rapid customer growth and equity concerns required the company to change its billing system so customers would have metered rates instead of paying a flat monthly price.

— Case 05-1042-WW-AIR

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