Office of the Ohio Consumers' Counsel

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Contact: Marty Berkowitz
(614) 387-2962

OCC: Rate decrease warranted for residential water customers of Ohio American Water

COLUMBUS, Ohio – January 5, 2010 – Residential customers of Ohio American Water (OAW) would pay lower rates based on reductions sought by the Office of the Ohio Consumers’ Counsel (OCC). The consumer advocate yesterday filed testimony with the Public Utilities Commission of Ohio (PUCO) asking to amend a proposed OAW rate increase.

The adjustments proposed by the OCC reflect corrections and changes to the PUCO’s Nov. 27 staff report. Combined with the PUCO staff’s recommendations, OAW customers would see a decrease of more than $7.3 million for water and wastewater rates.

“Ohio American Water has asked to recover operating expenses above and beyond reasonable amounts from consumers without providing any additional benefits,” said Consumers’ Counsel Janine Migden-Ostrander.

The OCC also discovered OAW allocated a disproportionate percentage of its costs to residential customers that subsidize the rates that industrial customers pay. Proper allocation of costs to each customer class, in addition to other adjustments, will bring residential water rates below current levels.

“Residential customers should not have to pay more for their service by subsidizing other customer groups,” Migden-Ostrander said.

If the OCC’s suggested adjustments to the PUCO staff report are accepted by the Commission, average residential customers shall see a decrease in their monthly bills for water service, not an increase as requested by OAW. An average water customer in OAW’s Franklin and Portage districts using 6 Ccf of water per month would see a rate decrease of 6.38 percent.

Similarly, an average water customers using 10 Ccf in all other districts (Ashtabula, Lake White, Lawrence, Mansfield, Marion and Tiffin) would experience a rate decrease of 8.1 percent. The OCC’s recommendations would result in a nominal increase to monthly wastewater rates of 75 cents for the average residential consumer.

The OCC also is seeking to maintain or improve water quality, improve low-income programs, properly address conservation plans and make other improvements that will adequately protect consumers.

The OCC agreed with the PUCO staff’s recommendation to reject OAW’s proposal for an annual step increase in rates through 2013. The OCC also agreed with the recommendation to reject OAW’s plan to implement a charge to collect from customers payments for taxes, infrastructure replacement and other expenses outside the utility’s control.

The OCC’s objections to the PUCO staff report filed Dec. 28 also addressed the need for an independent management audit of certain expenses incurred by the utility.

In June 2009, OAW asked the PUCO to approve a $25 million rate proposal to be collected from all customer classes over four years. If the Commission approves the request as proposed by OAW, then residential water rates would increase between 71 percent and 78 percent over four years. Additionally, wastewater rates for Franklin County customers would increase 36.5 percent over four years.

OAW serves about 51,000 residential customers in portions of Ashtabula, Franklin, Lawrence, Marion, Morrow, Pike, Portage, Richland and Seneca counties.

About the Office of the Ohio Consumers' Counsel

The Office of the Ohio Consumers' Counsel (OCC), the residential utility consumer advocate, represents the interests of 4.5 million households in proceedings before state and federal regulators and in the courts. The state agency also educates consumers about electric, natural gas, telephone and water issues and resolves complaints from individuals. To receive utility information, brochures, schedule a presentation or file a utility complaint, residential consumers may call 1-877-PICKOCC (1-877-742-5622) toll free in Ohio or visit the OCC website at www.pickocc.org.