Liberty seeks 41% hike in water rate

Liberty Utilities has filed a rate increase request with the state Public Service Commission.

The proposed rate increase by Liberty, if approved by the commission, would increase a residential customer’s water bill by about $3.20 a month over three years — a 41% increase from what residents now pay, Liberty Utilities representatives said Tuesday during a special Public Works Committee meeting.

The request, filed Sept. 30, is part of a non-monetary settlement agreement signed earlier this year between Liberty, the PSC and the attorney general’s office.

That agreement outlined significant investments that Liberty needed to make in its infrastructure and overall operation to avoid another collapse of the city’s water system like the one that occurred in February 2021.

In two days, 19 inches of snow fell. Frozen water pipes burst, causing leaks throughout the city. The leaks caused water pressure to drop significantly. The city’s water system was unable to pump fast enough as water leaks were above and below ground. University of Arkansas at Pine Bluff students were displaced and patients were moved from Jefferson Regional Medical Center.

Liberty Utilities came under fire for the water crisis. Gov. Asa Hutchinson visited the city. Attorney General Leslie Rutledge intervened, and the Public Service Commission investigated, resulting in the agreement.

“It was a bad situation,” Tony Penna, Liberty Utilities vice president and general manager, said at Tuesday’s special called meeting. “What if it went another week and the pressure got worse … it could have been like Flint, Mich.”

He said the storm attention highlighted needed improvements.

While Liberty took responsibility for many of the problems in February 2021, R.L. Davis, Liberty’s business and community development manager, told the committee that Pine Bluff residents still need to improve winterizing their homes. He said that’s why Liberty implemented

an educational awareness campaign about frozen pipe prevention.

“Many of the leaks happened on customers’ homes,” Davis said.

The rate increase is still tied, however, to the overall failure of Liberty during the winter storm.

Penna, who relocated to Pine Bluff in August 2021, said the rate increase request is also a “natural consequence” of a utility “doing business.”

He said many utilities ask states for a rate increase every three to five years. The last rate increase for Pine Bluff water customers was 2015, he said.

“I think utilities should go through the process of a rate case to make sure the PSC takes an in-depth look at your expenses and operation and make comments about it,” Penna said.

The rate request process takes 10 months to complete, Donna Gray, the commission’s executive director, said in a phone interview.

The commission’s auditors, economists and rate experts will spend thousands of hours investigating the request before making a recommendation for an increase.

Individuals or groups with a vested interest in the rate increase can make a written request to the PSC to be granted “intervenor status.” The attorney general’s office has already filed as an intervenor. The city of Pine Bluff could petition to become an intervenor.

Anyone can make a public comment on the PSC website about the rate increase, Gray said.

The commission has “exclusive jurisdiction” over the decision, she said, meaning once it is determined by the PSC it is enacted.

Gray called Liberty’s request “significant” as the rate request would increase the utility’s current revenue requirement from $10 million to $15 million.

“Because of the magnitude, they [Liberty] are requesting a phase-in,” Gray said.

Charlotte Emery, senior director of Liberty’s Rates & Regulatory Affairs, explained the phase-in during Tuesday’s meeting via Zoom.

The “phase-in” would allow Liberty to increase rates over three years, starting in 2023.

In the first year, water customers would have a rate increase of 11.5%, followed by a 10.3% increase and lastly, in year three, a 9.4% increase. If the increase was implemented at once, customers would see a 41% increase immediately.

A slide of a sample bill showed that if the 41% was implemented at once, a customer could have an additional $10.80 on a bill. Instead, using the phase-in approach, a bill would likely increase about $3 more per month.

Penna said the rate increase covers previous improvements than future ones.

“The increase is a recovery of improvements that have already been made,” he told the committee.

The agreement between Liberty, the PSC and the attorney general required several improvements to the water system, including installing automatic meter reading meters for all customers, replacement of undersized lines and developing a specific and definitive policy regarding responsibility for the repair of leaks on the system and customers’ property.

Penna told The Pine Bluff Commercial that it wasn’t that the system wasn’t managed well.

“It was what we saw from that storm and the fear that it could happen again,” Penna said. “We’ve heard climate change is a reality and my concern is what if that snow storm that put 14 inches of snow on the ground, what if that becomes the new norm and then what do we do?”