Recently, Carolina Water Service filed a request with the North Carolina Utilities Commission (NCUC) to adjust customer rates to help fund increased service costs and critical investments needed to the water and wastewater system.
Customers are receiving this mailing from the NCUC to describe the public approval process that will take place to determine any rate changes. https://starw1.ncuc.gov/NCUC/ViewFile.aspx?Id=0c451bb9-4264-4f16-a737-52797ab28453
The company is also communicating directly with customers through the following letter.
Dear Customer,
Recently you received a notice in the mail from the North Carolina Utilities Commission (NCUC) detailing our company’s request to adjust your rates. I am writing to share more information on how rates are determined, how we will invest the money, and next steps in this public process.
How are rates set and adjusted?
At Carolina Water Service of North Carolina (CWSNC), we know you rely on us to deliver safe and reliable water and wastewater service to your home or business, and we are proud to serve our customers and communities. When you get your monthly water bill, you are paying your fair share of the cost to operate and maintain that system.
Our company is subject to strong oversight by regulators at the NCUC. For example, changing rates requires a lengthy public review where the NCUC and others help ensure that we are operating efficiently, complying with important regulations, and planning for the future.
In North Carolina, historically rates were adjusted based on the previous year’s cost to serve customers. Often, utilities asked for rate adjustments every year or two, which was an expensive and inefficient process.
Recently, lawmakers in North Carolina approved a helpful approach that allows utilities to file multi-year rate plans, a proven way to be more efficient and reduce the cost of rate proceedings. There are other benefits. Multi-year plans give companies a runway for capital investments and give customers certainty in rate changes they will experience over the next few years.
What changes does Carolina Water Service of North Carolina need to make to rates and why?
In July 2022, Carolina Water Service of North Carolina filed a request with the NCUC to approve a three-year Water and Sewer Investment Plan. In a formal proceeding, the company’s request will be rigorously examined by skilled regulators and perhaps by other intervenors.
If approved by the NCUC, the average retail customer will see a rate increase of approximately 29 percent spread over three years. More specifically, the proposed increase in year one is 19.7 percent, year two 4.99 percent, and year three 4.65 percent.
The company is also asking for the opportunity to earn a fair return of up to 10.7 percent for its investments in the system. Earnings are not guaranteed and depend on how well the company operates. Because this is a very capital-intensive business, a fair return is important to attract and retain investors provide significant funding to the organization.
While we recognize there is never a good time to ask customers to pay more for a product or service, the proposed rate increase is essential to the company’s ability to deliver safe and reliable water and wastewater services. Major reasons for the request include much needed capital investments, new products, and services our customers tell us they want and costs to comply with emerging environmental regulations.
Capital investments and improving the customer experience
The largest driver of the rate request is a pressing need to invest more than $110 million in the complex water and wastewater systems that serve our customers. As always, our goal is to help ensure safety and reliability. Here are a few examples:
- The nation’s water and wastewater systems are outdated, showing significant wear and tear and our infrastructure is not immune. The average age of some of our most important assets is 38 years and it is ready for replacement.
- We must modernize some of the technology on our system to better protect against physical and cyber-based threats, improve safety and make operations more efficient.
- Customers tell us they want more information and control over their water usage. Moving from analog to digital technology on meters, for example, and sharing that information with customers delivers on this important commitment.
Environmental regulations
As you would expect, strict regulations help ensure the safety of our nation’s critical water and wastewater assets. There are also emerging health and environmental policies, including a revised lead and copper rule and PFAS (better known as “forever chemicals”) standards. We anticipate compliance with these, and other new regulations will have significant financial impact on the company. Compliance with these, and other new regulations could have financial impact on the company.
What happens now?
Over a period of months, regulators and others will review the rate increase proposal. The NCUC will hold hearings to receive public input, review evidence in a regulatory proceeding, and eventually it will decide on the timing and amount of any rate increase. To learn more, customers may also visit the NCUC website and search Docket “W-354 Sub 400” at https://starw1.ncuc.net/NCUC/page/Dockets/portal.aspx.
CWSNC is committed to serving you—our customers—with excellence and environmental stewardship. We promise to provide a high-level of service, to communicate with you effectively, and to continue to reinvest in your water and wastewater systems.
Sincerely,
Don Denton
Senior Vice President
East Operation
Corix Regulated Utilities