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Story Last modified at 10:14 p.m. on Wednesday, January 5, 2011

AWWU rate hike knocked down
State approves temporary water and sewer increases

BY ZAZ HOLLANDER
Alaska Star

State regulators have placed a six-month hold on Anchorage Water and Wastewater Utility's bid to raise water and sewer rates by a total of 23 percent.

But your bills are still going up.

The Regulatory Commission of Alaska last week approved a temporary rate increase of nearly 14 percent for the utility's customers, including about 11,000 Eagle River residents.

The hike went into effect this week.

AWWU has until Jan. 11 to file a petition asking the agency to reconsider its decision.

If no petition is filed – or if the RCA denies it – the increase will remain in place pending the commission's in-depth investigation into the utility's rationale for the rate hike, a process that generally involves utility officials, the state attorney general's office, and commission staff and members.

That process could last until February, with several hearings scheduled in the interim. If the state commission finds the temporary rate increase isn't justified, regulators could make AWWU refund the higher payments plus interest.

"They need to show burden of proof of why they need this much," RCA spokeswoman Grace Salazar said.

The interim increase, as approved by the RCA, is 1.96 percent for water and 11.75 percent for sewer.

A single-family home will pay $4.29 more, an increase that will show up in January's bills, said AWWU spokesman Chris Kosinski. Water rates will go from about $40.59 a month to $41.39; sewer rates will go from $29.66 to $33.15.

AWWU in November proposed an 8 percent water hike and 15 percent for sewer.

Officials said the increases were necessary to pay off capital improvement projects at aging facilities, including a new $3.3 million ultraviolet disinfection system at the utility's Eagle River wastewater treatment plant.

Now, the lower interim rates will reduce the utility's 2011 revenues for water by $2.8 million and for wastewater by $1.1 million, according to Kosinski.

AWWU must pay off the construction projects, so any cutbacks resulting from the lower utility bills will have to come out of daily operations, he said. At this point, however, AWWU isn't changing its planned operations.

Kosinski said AWWU officials were "surprised and disappointed" at the commission's ruling last week.

The customer is protected because AWWU has to pay back any increases found to be unnecessary, he said. But the utility isn't protected if the commission later finds that the rate hikes were justified.

"It puts us in a hole," he said.

Along with the current proposed increases, AWWU also plans to propose hefty annual rate increases through 2016, according to a budget summary filed last month with the Anchorage Assembly.

Over that time, the bill a family would pay for water would go from about $40 last year to $64.50. The bill for wastewater would go from about $29 to $52.

State regulators received numerous comments opposing the hikes – 25 on the water hike and 32 on the sewer, according to the RCA's Dec. 27 order. "All of the comments opposed, or requested further examination of, the rate increases proposed by AWWU."

A prehearing conference is scheduled for Jan. 27.

Zaz Hollander can be reached at zaz.hollander@alaskastar.com.



This article published in The Alaska Star on Wednesday, January 5, 2011.