Public Service Commission approves Artesian water rate increase

In a unanimous vote, the Delaware Public Service Commission approved a settlement agreement that will allow Artesian Water to increase water rates for customers in Delaware, Cecil County, Md. and Chester County, Pa. by 15%.

The June 12 evidentiary hearing ran only about 20 minutes, as the details of the settlement were worked out over nearly a year’s span. 

In April 2023, Artesian first went before the commission proposing a 23% increase in water rates, representing about a 10% return on equity. That was too much for the commission, which in June 2023 suspended Artesian’s increase request pending hearings on the justness and reasonableness of such an increase. In November, the commission approved interim rates representing about a 14% total increase. Artesian then came back seeking a 22% increase. In May, the two sides negotiated a settlement allowing for a 15% increase. Under the settlement agreement, the increase will net Artesian a 9.50 percent return on common equity and an overall rate of return of 6.75 percent. 

Artesian’s stated reason for the increase is to keep up with rising costs of treatment and distribution. The company last asked the commission for a rate increase in 2014. 

The only witness speaking on behalf of Artesian was Chief Financial Officer Dave Spacht, who worked on the settlement for Artesian. He said he believed the rate increases were just and reasonable, a statement echoed by John Bowman, who was the state’s regulatory case manager on the settlement. Neither witness was cross-examined by the state’s attorneys or members of the commission.

The final witness was Andrea Maucher, an analyst for the Delaware Public Advocate, which represents citizens before the commission. 

Maucher said the public advocate participated in the settlement negotiations and helped bring down Artesian’s original ask for a 23% water rate increase. She said the reason for settlement negotiations was that her office recognized that if the case had been litigated, some of the public advocate’s positions may not have held out with the commission, so the settlement was reached to lock in lower rates than what Artesian was originally asking for. She said among the concessions the public advocate got Artesian to agree to were a shorter amortization process and for Artesian to have to carry out formal studies aimed at better informing customers about future increases.

Maucher described the settlement as “a fair result for the company and its customers.”