Frequently Asked Questions: Rate Review Process
On June 30, 2020, Missouri American Water filed an application with the Missouri Public Service Commission (MoPSC) requesting a review of water and sewer rates to recover investments associated with providing safe, clean, and reliable water and sewer service for the more than 200 communities we serve throughout the state.
The Frequently Asked Questions below are intended to provide helpful information and show you the projected rate impact based on Missouri American Water’s request.
CUSTOMER RATES WILL NOT CHANGE UNTIL THE MISSOURI PUBLIC SERVICE COMMISSION REVIEWS THE REQUEST AND ESTABLISHES NEW RATES.
Rates are set by an independent state commission, the MoPSC, and their ruling will come after an extensive 11-month review of the case and opportunities for public comment. The rates approved by the MoPSC may be different than the company’s proposed rates. Any newly approved rates will not go into effect until mid-2021.
Customers may also submit questions via email to MORateReview@amwater.com
How will this proposed rate change affect my monthly bill?
- The change will vary based on your service area location.
- Water rates are currently divided into two zones:
- Zone 1: St. Louis County
- Zone 2: All other districts
- Sewer rates are currently divided into three zones.
- This case requests a single rate for all water operations and three rates for sewer operations.
Is there a way I can determine what my bill would be under the proposed rates?
- Yes. Water rates include a fixed charge based on meter size, as well as a usage charge. For a typical residential customer with a 5/8” meter, the proposed fixed charge is $12.00 per month. The proposed usage charge is $6.9827 per 1,000 gallons.
Example: If you are a monthly customer and use 4,000 gallons per month:
Fixed Charge: $12.00 (5.8-inch water meter)
Usage Charge (rate per 1,000 gal): $6.9827 x 4 = $27.93
Total Monthly Bill (Fixed + Usage Charge) = $39.93
*This is an approximate total not including taxes and fees.
What about rates for industrial and commercial customers?
- The proposed increase is different for each rate category.
- Below are charts reflecting the proposed water rates. Rates are divided by a customer charge (a fixed charge based on meter size) and usage charge for every 1,000 gallons of water used. The customer charge is the same every month, while the usage charge varies with consumption.
When will the rates change?
- Rates will not change until the MoPSC completes a comprehensive review of the request. This process will take approximately 11 months and will include opportunities for public input. Rates determined from this case are not expected to go into effect until mid-2021.
Why does Missouri American Water need this rate increase?
- The proposed increase is needed to recover costs for major improvements to water and sewer systems that are necessary to maintain reliable service.
- Most of these investments are not reflected in current rates. Statewide approximately $950 million has been or will be invested in these improvements from January 2018 to May 2022.
- This investment includes replacing approximately 275 miles of aging water and sewer mains, as well as valves, service lines and other parts of the more than 7,300-mile network of water and sewer pipes. It also includes improvements to treatment plants, storage tanks, wells and pumping stations.
- The need to improve water and sewer systems in a national challenge. The American Society of Civil Engineers recently stated an estimated $1 trillion of investment is needed across the nation over the next 25 years in water system investments, and an estimated $271 billion in sewer system investments. Increasing regulations and water quality standards continue to contribute to increases in costs for service nationwide.
When was the last time Missouri American Water filed for a rate review?
- The company last filed for a rate review in 2017, and rates were adjusted in 2018.
- Rates determined from this case are not expected to go into effect until mid-2021.
What determines the timing of the rate reviews?
- Missouri American Water files requests for rate reviews to recover significant investments to maintain and upgrade treatment plants, pipes, pumps, storage tanks and other parts of the water and sewer systems.
- Missouri American Water carefully plans and invests in system improvements that enhance service and reliability, both now and for future generations.
Why do some municipal systems have water and/or sewer rates that are less than Missouri American Water?
- Our rates are regulated and set by the MoPSC and reflect the true cost of service, which includes properly maintaining and improving the systems as they age. We work hard to keep rates down, but we also balance that with the need for significant capital investment so our systems continue to provide safe, reliable service and meet all state and federal standards.
- Although the rates charged by some other systems might be less, the gap is often due to the difference in investments. In many cases, water and sewer systems with rates significantly lower than Missouri American Water’s have not made adequate improvements necessary to maintain reliable service or compliance with environmental regulations. We make capital investments to provide quality, reliable water and sewer service. Our approach is to proactively make system investments to improve reliability and resiliency, while reducing the risk of serious service issues or water quality problems.
- Municipalities also do not pay local property taxes, which we do. Our annual cost for property taxes in 2019 was $26 million.
How can Missouri American Water ask for higher rates at this time when many families are struggling financially?
- There is never a good time for ask for a rate increase.
- Missouri American Water has a responsibility to properly maintain and upgrade our systems to deliver quality, reliable water service and fire protection for the communities we serve.
- This requires significant capital investment, which totals approximately $950 million from January 2018 through May 2022. The MoPSC sets rates that are fair and reasonable, which includes the recovery of prudent investments.
Do you offer any programs for customers needing assistance to pay water bills?
- Any customer who is having trouble paying their bill is encouraged to contact the company for information about payment assistance programs and payment plans.
- Financial assistance is available through our H2O Help to Others Program (more information available at https://amwater.com/moaw/customer-service-billing/low-income-program).
- There is also a Low-Income Tariff currently available for customers in our Northwest Operations of Brunswick, Platte County and St. Joseph. Customers that are eligible for utility assistance through LIHEAP (Low Income Home Energy Assistance Program) in these locations are also eligible for a reduced customer charge on their water bill.
What is Missouri American Water doing to control costs?
- Missouri American Water works hard to control our costs and operate as efficiently as possible. This allows us to keep rates as low as possible while making critical investments in our systems.
- Missouri American Water employs best management practices and cost containment techniques, while taking advantage of economies of scale to enhance efficiencies and reduce operational costs.