Artesian asks to raises rates; average bill would go up 7%

Ken MammarellaBusiness, Headlines

Artesian Water has filed for a rate increase. (Kaboompics photo on Pexels)

Artesian Water has filed for a rate increase. (Kaboompics photo on Pexels)

The Artesian Water Co., which supplies water to over a third of Delaware’s residents, has filed a request to increase rates.

If the Delaware Public Service Commission approves the proposal, the bill for the average residential customer using 4,000 gallons per month would increase $49.90 to $56.73. That’s not quite 7% higher.

The application to the PSC asks to increase revenue 23.84%, or approximately $17.54 million, on an annualized basis.

It’ll be months before the request is implemented.

Artesian’s request was announced just a day after Veolia said it wanted to increase its rates.

Both utilities cited the cost of infrastructure investments.

Since Artesian’s last request for new rates nine years ago, it will have invested over $158 million in water infrastructure across all three counties. That includes renewal and replacement of 45 miles of aging water mains (out of the 1,442 miles it has), addition of a major booster station, upgrades of existing stations, a new elevated water storage tank and upgrades to treatment equipment and facilities.

Artesian’s strategies

Since that last rate application, Artesian said it has used various strategies to delay the need to raise rates, including:

• Taking advantage of historic low interest rates by issuing new and refinancing existing long-term debt to reduce its average interest rate by 33.7%, from 5.84% to 3.87%.

• Making investments to add sources of supply, booster facilities and transmission mains to reduce its need to purchase water. As a result of these investments, Artesian reduced the required minimum amount of water it purchases from the Chester Water Authority by 83.3%.

• Utilizing a Distribution System Infrastructure Charge between rate applications, which allows up to a 7.5% surcharge on customer bills for select infrastructure improvements, including main replacements, hydraulic improvements and water quality treatment. This enables Artesian to recover investments for necessary projects while avoiding a full rate increase. Artesian has in place the maximum 7.5% surcharge; once a change of rates goes into effect, this surcharge is reset to zero.

“Artesian’s entire management team has championed cost-effective solutions, allowing us to continue to deliver the same superior services our customers have always relied on, despite current supply constraints and increased costs,” CEO Dian C. Taylor said in a statement.

Its announcement for the rate hike pointed out ways it has helped customers:

• Artesian negotiated for full reimbursement of the $10 million it invested to treat contaminated water from its Llangollen wellfield. Customers received a $27 credit on their bill in October 2022, and active customers will receive a similar credit annually through 2025.

• Artesian has designed water rates to encourage customers to minimize water consumption to conserve water and reduce their bills. In 2012, Artesian transitioned most customers to monthly billing, enabling customers to better budget household expenses by detecting leaks sooner that would cause a higher bill.

• Artesian in 2009 created a program that has provided more than $900,000 of financial assistance to customers. The now-expired Federal Low Income Household Water Assistance Program, created during the COVID-19 pandemic, provided over $100,000 of financial assistance to customers in less than a year. Artesian supports restoring the program.

Artesian is the oldest and largest regulated water utility on the Delmarva Peninsula, providing water service since 1905.

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