Local residents ask questions about proposed hike in water rates

Jan. 20—A rate increase of up to 25.7% filed with state regulators by Missouri American Water Co. is intended to recover part of the cost the company has incurred in its drinking water and wastewater business to replace aging equipment and lines.

Representatives of the staff of the state regulator, the Public Service Commission, told Joplin area residents who attended a public hearing Thursday night on the rate request that the amount would be under review and that public comments would be taken into consideration. Evidentiary hearings will be conducted in February and March by the PSC. A decision may be ready in April.

Jeffrey Kaiser, vice president of operations of Missouri American, said the rate request was filed in July, which started a months-long review of the details of the request and the investor-owned company's financials by the PSC and the Office of Public Counsel, which represents ratepayers.

He said the rate request was based on the company's expense of about $770 million overall across Missouri that has been spent or will be by 2023 on operations and maintenance expenses and capital costs to replace and repair components of its water and wastewater systems.

There was about $99.6 million spent on projects done in the Joplin area by Missouri American.

Local investment has included the replacement of high power pumps at the Joplin treatment plant at 21st Street and Murphy Avenue, as well installation of new lines in several neighborhoods, replacement of fire hydrants and old lead lines or connections to homes.

If the entire rate request were granted, it would mean an increase of about $12 monthly for the average customer who uses about 4,200 gallons of water, Kaiser said, though the amount of the increase will be determined by the PSC's decision.

The PSC will hold evidentiary hearings over the next two months to make that determination and may have a decision in April.

While the company provides drinking water to the Joplin area, Joplin wastewater services are provided by the city of Joplin. But for those who have wastewater service through Missouri American, most would stay the same except flat-rate customers who could see an increase of $3 to $10.

Resident comments

Resident John S. Ockert asked the profitability of both the overall company, American Water Works, and the Joplin subsidiary. Kaiser said the company does make a profit, though he did not say how much. The company reported $70.5 million in net income for 2021 on a $2.9 billion investment, or ratebase, for the state. He added that the PSC sets a rate of return that Missouri American is allowed but the company has never met that level of return on investment.

As the company invests, it cannot collect until a rate case is filed, so the company has hundreds of millions of dollars that is uncollected and that "is a big drag on our profitability," Kaiser said. Inflation costs also have to wait on a rate case filing, he added.

Most of the maintenance and infrastructure is depreciated over 30 to 50 years before it comes off the company's books, Kaiser said. Shareholder return is based on the depreciation rate.

Ockert asked how much revenue will be generated by the new rate and how long it would take to pay off the investment of the infrastructure paid for with the rate. He also asked if it would be paid off by the time of the next rate case if the company goes 2 to 4 years to file another. Kaiser said it's in the rate filings but he did not have the figure at the hearing but shareholder equity is based on depreciation.

The company was asked by another resident to list the infrastructure costs involved in the rate case. Kaiser said there is a long list.

Matthew Barnhart, director of operations for the Missouri American, said that for the Joplin service area the most significant are $15 million worth of water main replacements and about $10 million for installation of the new high power water pumps at the treatment plant.

Ockert testified that it was his opinion that the for-profit company should use its own money to pay for improvements. He asked that the rate increase amount by adjusted.

Tammy Walker is director of community development with the Economic Security Corp., an agency that connects low-income residents to programs that can help them, including utility assistance. She testified that there are 5,328 area households that turn to ESC for assistance. There have been programs that provide money to pay electric and gas bills for low-income residents and last year a program to help with water bills became available.

Of those served by the programs, 92% are elderly or disabled and live at or below poverty level. She said many have income of only $840 per month for two people and $1,600 or less for four people. There were 865 households that obtained help last year with water bills.

"For them, any increase is too much," she told the PSC.

Kaiser said the water company offers options for people to pay their bills, including installment plans, low-income grants and budget billing. Anyone who has difficulty with their bill can email the company explaining their situation and asking for assistance. That email address, he said, is president@moamwater.com.

Reservoir plan

Area resident Marsha S. Miller asked the status of the company's plan to build a water reservoir in the Diamond area of Newton County.

Barnhart said it is in the planning and approval process by federal regulatory agencies and could take at least two years to obtain approval.

None of the costs so far regarding the reservoir are part of a current rate increase request, Kaiser said. "That's a project that is large enough that we will go to the (PSC) to get their approval before building that," he said.

Miller asked if the reservoir process looks promising.

"I would say in my opinion based on being in my 23rd year here that it is very promising; we're going to have to have it. We've got to do everything we possibly can to come up with an alternative water source."

It is to be situated on about 1,100 acres of land in Newton County east of Interstate 49 and south of the George Washington Carver Monument. It would hold about 8 billion gallons of water when completed, and is planned to include a new dam and pumping station.

A reservoir is needed because the Joplin source of drinking water is Shoal Creek, which is fed by the Ozark aquifer. Water levels in the aquifer have been declining as demand and usage increase. As the water level in the aquifer goes lower, it creates the potential for the contaminated Springfield Plateau to commingle with the clear Ozark waters. Rapid decline in the Ozark aquifer and the possibility of future contamination problems have led to the water company's decision to impound water sourced by Baynham Branch.

Tom Aley, a hydrogeologist and president of the Ozark Underground Laboratory, was hired by landowners in the area to study the site. He was at Thursday's hearing and submitted a letter he wrote about the risk the reservoir will fail. "It will leak faster than it will fill. The lake will never fill and water users will not get the water," he told the commission.

Mike Hunley, a resident in the area who is opposed to the reservoir construction, said that the water company has done no testing on his property, which would become a feeder to the impound. He questioned how it could be determined the reservoir would hold water since the company has done no testing on his property.

Hearing officials said this rate case does not involve the reservoir costs.