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Berkeley County water rate increase sought

January 31, 2013|By MATTHEW UMSTEAD | matthewu@herald-mail.com

MARTINSBURG, W.Va. — The Berkeley County Public Service Water District says it needs to increase customers’ rates by 19.5 percent to stay financially afloat and refinance debt.

The water district’s petition filed Monday with the state regulatory agency includes a 5 percent increase for emergency interim relief and a 14.5 percent increase to refinance about $12 million in debt.

The 5 percent rate increase request could be decided within 60 days, water district Executive Director Paul S. Fisher said Thursday. A decision on the 14.5 percent rate hike could be made by the end of October, Fisher said. Any rate increase would be the first since 2009, water district board chairman Gregory S. Rhoe said Thursday.

A 1.35 percent rate increase approved by the state last fall to finance three projects, including a consolidated operations center, will not go into effect until the work is completed, Fisher said this week.

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The new facility is not expected to be done until next year.

If approved by the West Virginia Public Service Commission, the minimum monthly residential bill for the water district’s more than 20,000 customers would increase nearly $4, according to a news release from the water district Thursday.

The monthly bill for 4,500 gallons of usage would increase nearly $7, according to the announcement.

Fisher told district board members Monday that the water district was “bleeding cash” and that revenues were not headed in the right direction.

Revenue from a 5 percent rate increase would allow the district to maintain required minimum debt coverage ratios that are required by creditors in existing lending agreements and bond documents, the water district said.

The water district currently has about $69 million in outstanding debt, Fisher said Thursday.

The water district’s debt load includes about $12 million in financing that was being paid off with capacity improvement fee revenue. The fees had been collected since 2005 for most new water connections, but the state Public Service Commission ruled in May 2012 that the county could no longer collect the money.

The state regulatory agency ordered the fees to be discontinued, ruling the criteria for collecting them, which involved measures of rapid and expansive growth, were no longer being met.

With no capacity improvement fee revenue, the water district has proposed the 14.5 percent rate increase to generate money for the debt service.

“The fees were used to borrow funds that were used to create capacity that will last far into the future,” Rhoe said.

“Now that the capacity is created, the funds are being shut off before the improvements are paid for. I don’t understand why the PSC did this but they are where they are and I am where I am,” said Rhoe, who lamented the state’s “one size fits all” approach to setting utility rates said.

The Public Service Commission had authorized the county’s public water and public sewer districts to collect capacity impact fees of $3,120 and $3,650, respectively. The decision by the Public Service Commission came amid a booming housing market and at a time when Rhoe said the county was running out of water.

The state allowed the water district to obtain $20 million in financing based upon the new capacity improvement fee revenue stream. The funding was used for the construction of a new treatment plant and water intakes on the Potomac River, according to the water district.

Since the state’s decision in May 2012, the county could have collected $1,042,000 in fees for 313 connections, Rhoe said.

Curtis B. Keller, general manager for the Berkeley County Public Service Sewer District, said Thursday that it would not be requesting a rate increase as a result of the state’s decision to stop capacity improvement fee collection.

The Public Service Commission decision, however, will impact future rate increase requests and upcoming nutrient upgrade projects, Keller said.

The sewer district had planned to offset the impact of the mandated projects on customers’ rates with available borrowing capacity, but that financial flexibility now is expected to be consumed by the need to refinance about $10.7 million owed for the utility’s capacity improvement fee debt, according to Keller.

The sewer district has about $110 million in debt, Keller said.

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