[Archived] City of Alexandria Helps Reduce Water Rate Increases for Virginia American Water Customers

­­For Immediate Release: December 4, 2020

Following intervention by the City of Alexandria, the State Corporation Commission (SCC) has significantly reduced Virginia American Water Company’s requested increase in customer water rates, which will result in a refund of previous overcharges to customers. The company is the privately owned, for-profit provider of drinking water in Alexandria.

“Virginia American Water remains an important partner in Alexandria’s water system,” said City Manager Mark Jinks. “While water rate increases are needed from time to time to maintain and improve aging infrastructure, they must be reasonable. I commend the City Attorney’s, the City’s Energy Manager and other City staff who worked hard to advocate on behalf of Alexandria water customers for increases to be structured and paced fairly and equitably.”

In November 2018, the company applied to the SCC to increase revenue from water customers by up 15.84%, or up to approximately $6.6 million per year. In April 2019, at the direction of the Alexandria City Council, the City formally objected to the increase and encouraged the public to provide input. The City’s primary objections were that the company’s proposed return on equity (i.e., profit margin) should be lower; the rate of bill increases should be gradual and representative of national averages; and costs of serving customers should be appropriately and fairly allocated between residential, commercial and industrial customers.

On November 6, 2020, the SCC approved an increase of only up to 2.9% in revenue for the company, or up to approximately $1.2 million per year, equivalent to increased water usage charges of approximately $45 per year for the average residential water customer in Alexandria. Under state regulations, the company had been allowed to increase rates preemptively, on the assumption they would later be approved. As a result of the SCC’s final order, the difference between the original increase and the approved increase will be refunded to customers as credits on future water bills. The average customer in Alexandria will see a reduction of approximately 10% in water usage charges (approximately $31 per year), retroactive to the initial increase on May 1, 2019. The company submitted a new rate schedule on November 30, 2020, to align with the SCC’s order, and provides tips on its website for reducing water use.

The SCC also rejected the company’s proposal to convert the additional Water and Wastewater Infrastructure Service Charge, which has been a pilot program in Alexandria, to a permanent fee in all of the company’s service areas statewide. The SCC will continue to review this fee over the next two years as part of the initial pilot period.

For media inquiries regarding the City’s intervention in this case, contact Andrea Blackford, Senior Communications Officer, at andrea.blackford@alexandriava.gov or 703.746.3959. For media inquiries regarding Virginia American Water Company’s rate request or the State Corporation Commission’s hearing of the case, contact those organizations.