The high cost of high efficiency

An editorial from the Charleston Daily Mail

CHARLESTON, W.Va. — The West Virginia American Water Company treatment plant in Charleston has the capacity to produce 50 million gallons of fresh, potable water a day.

As nearly everyone in the area now knows, it’s an important and efficient plant. In fact, the plant’s efficiency and extra capacity is why the water company has been pursuing a growth strategy of adding customers by acquiring smaller, older, less efficient local water systems.

It’s a good business strategy for a regulated public utility with otherwise low revenue growth potential. The state Public Service Commission regulates the company, which can only raise the prices its customers pay for water by filing a rate increase request.

Whatever service a regulated utility provides, the Public Service Commission works to keep that company’s rates low. The PSC’s Consumer Advocate often fights rate increase proposals with a vengeance.

The water company keeps rates low by consolidating as many customers onto the same water system as it can. That way, only one capital intensive water treatment facility is needed to efficiently provide customers with a steady source of clean water.

When efficiency and low cost of water are the only concern, it’s a great practice. But when it comes to water security and safety for hundreds of thousands of customers, a single source of treated water can be a liability…

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