About Rates

The cost of a gallon of Pennsylvania American Water is about a penny – a great value for the money. It’s pretty amazing when you think about what’s involved in the process.

Delivering high-quality water and service requires continued investment in treatment and distribution (pipeline facilities) to replace aging infrastructure and make the necessary system upgrades to meet drinking water standards. That’s why each year, we invest millions of dollars in improvement projects across the state. And, that’s just one example of the costs of doing good business.

We make the investments, but we don’t set our own rates. Pennsylvania American Water is regulated by the Pennsylvania Public Utility Commission (PUC), and rates are established based upon the cost of providing service. This includes construction, maintenance, operation, administration and financing.

And, the majority* of those investments are not included in current rates. Simply put, the company makes the investment first, and then seeks to recover the costs the next time it files with the PUC to request change in rates. This is referred to as a base rate case.

As part of the rate filing, Pennsylvania American Water must submit to the PUC extensive financial and operational data documenting its cost of doing business. The PUC then scrutinizes information provided by the company in an open and thorough process. Public hearings are often held around the state to obtain customer input.

After examining all the information, the PUC may grant all, some or none of the company’s request.

If an investment is deemed prudent and is approved, generally, the cost of that improvement is recovered over the life of the asset, not immediately in one shot. For example, if the company installs a pipeline at a cost of $1 million and the life of asset (the pipeline) is 100 years, it would take 100 years for the company to recover the costs related to that project.

*Costs of some pipeline projects can be recovered between base rate cases through the Distribution System Improvement Charge (DSIC), a program that was spearheaded by the PUC and has allowed the industry to accelerate distributions system improvements, such as pipeline replacements, meters, hydrants.

Pennsylvania American Water’s Rate Structure

There are two main components to rates: The cost per gallon used and the monthly service fee.

The cost for Pennsylvania American water is $0.6809 per 100 gallons.

The service fee for residential customers is $12 per month. This helps to recover the cost of providing meter reading and billing, as well as the capital costs for providing the meter.

When you put the two together, our average residential customer pays about a penny a gallon. And, it’s delivered straight to your tap!