Virginia American Water Proposes Rate Hike, Alexandria Expresses Opposition

ALEXANDRIA, VA — Alexandria City Council has directed the city government to express opposition on a proposed rate increase by Virginia American Water, the water utility provider in the city.

Virginia American Water is seeking approval from Virginia's State Corporation Commission to increase its annual jurisdictional sales revenues to nearly $14.3 million, a 27.6 percent increase over current revenues.

The application, filed in November 2021, resulted in rates taking effect on an interim basis on May 1, 2022, "subject to refund" depending on the commission's final decision. Interim rates for an average Alexandria residential customer using 4,000 gallons of water per month increased by a monthly $6.88, according to the company. That would equate to an $82.56 increase per year.

As a regulated utility, Virginia American Water must apply with the State Corporation Commission and demonstrate the cost of service, including construction, maintenance, operation, administration, taxes and financing. After review, the State Corporation Commission sets the utility company's rates.

If the State Corporation Commission approves a lower rate, Virginia American Water said it would issue credits with interest to customers.

The City of Alexandria first expressed intent to oppose the proposed rate increase in February 2022. The city estimated the proposed rate increase would increase an average residential customer's bill using 4,500 gallons of water per month by $117.

In particular, the city believes the proposed 10.9 percent return on equity (profit margin) should be lower and wants any bill increases to be gradual and reflect national averages.

"While Virginia American Water is an important partner in Alexandria’s water system, the City has a responsibility to the community to speak up when rate increases are too aggressive," said City Manager James Parajon in a statement. "Increases are needed from time to time in order to maintain and improve aging infrastructure, but they must be structured and paced fairly and equitably."

In a previous news release, Virginia American Water attributed the proposed $14.3 million rate increase to the $137.6 million in infrastructure investments the company is making from May 2020 through April 2023. The infrastructure projects include the replacement of water main in Alexandria to improve water pressure for business and residential customers as well as for fire protection.

Customers having difficulty paying their bill can seek help from the company's bill paying assistance programs.

“Virginia American Water continually strives to find more efficient and cost-effective ways to operate," said Barry Suits, Virginia American Water president, in a previous news release. "We also have bill payment and other assistance programs available for customers who may need help."

The State Corporation Commission will hold a public hearing on the proposed rate increase starting at 10 a.m. on Sept. 23 by phone, then 10 a.m. on Sept. 27 by phone, webcast or in person at the Tyler Building, 1300 E. Main St., Richmond, VA. Residents may submit comments on the proposed rate increase online and view case number PUR-2021-00255 on the State Corporation Commission's website.