City of Alexandria, Virginia
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MEMORANDUM
DATE: FEBRUARY 6, 2024
TO: THE HONORABLE MAYOR AND MEMBERS OF CITY COUNCIL
THROUGH: JAMES F. PARAJON, CITY MANAGER /s/
FROM: CHERAN IVERY, CITY ATTORNEY
RYAN FREED, CLIMATE ACTION OFFICER
DOCKET TITLE:
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Consideration of Virginia American Water Company's Proposed 29% Overall Rate Increase.
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ISSUE: Consideration of Virginia American Water Company's ("VAWC") proposed 29% overall rate increase.
RECOMMENDATION: That City Council support City staff to (1) minimize the unreasonable magnitude of the proposed water rate increase for Alexandria's residents and businesses, including opposing VAWC's 29% overall rate increase by intervening as a respondent in the recently docketed case, retaining outside counsel and experts to oppose the increase and (2) as appropriate, oppose any additional unreasonable requests by VAWC's rate increase application.
BACKGROUND: On November 1, 2023, VAWC filed an application with the State Corporation Commission ("SCC") requesting an increase in allowable revenues and to increase customer rates, claiming the increase is needed to cover major capital investments in its system ($19 million) and to provide a greater rate of return on common equity (10.95%). In its rate increase application, VAWC proposes the following to its Alexandria residential and business customers:
* An increase in annual water service rates of approximately $19.7 million, or approximately 29% across all their service districts (including Alexandria, Prince William, Hopewell, Eastern Shore).
* A 10.95% proposed Rate of Return on Common Equity.
* A new process that would cause water rates to be adjusted automatically each year based on VAWC's revenue in the prior year. For example, if VAWC's revenue was less than expected in 2025, a surcharge would be added to customers' bills in 2026 to make up the difference.
* New programming to...
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