As Delawareans face steep increases in their electric bills, lawmakers and consumer advocates fear that householders will also see much higher water charges in coming months as utilities search for ways of paying for improved infrastructure including expensive filtration for toxic PFAS ‘forever chemicals’.
The Public Service Commission this week approved an interim rate increase of $2.5 million sought by Veolia, a water supplier which serves about 100,000 customers in the Bear and Newark areas. The increase is part of Veolia’s full request for $15.9 million, filed in January.
The rate increase request is part of the utility’s $62.4 million plan for what it calls “customer improvements.” Of the total, $42.5 million would be spent on filters to remove PFAS from water systems.
The $15.9 million is the amount needed to recover the costs associated with providing utility service above current revenues from customers, said Michael Bard, a spokesman for Veolia. It includes operating and maintenance costs, depreciation, taxes, interest, and reinvestments in the system.
“It is not a specific recovery of the investments made but includes the increases which are occurring for all of the items which are needed to support plant operations and recover the costs of providing service,” Bard said.
The full requested rate hike, if approved, would increase the company’s average residential water bill by 42.8 percent or $19.19 a month. The interim rate increase totaling $2.5 million approved by the PSC this week will add $2.24 per month to the bill of an average residential customer for now. Normally, it takes 9-12 months for the PSC’s review of a full rate request to conclude.
“It is not a specific recovery of the investments made but includes the increases which are occurring for all of the items which are needed to support plant operations and recover the costs of providing service."Michael Bard, spokesman for Veolia.
Veolia said it would temporarily help customers facing financial hardship to pay higher water bills should the full increase be approved.
An earlier case filed by Tidewater Utilities, serving some 60,000 customers in all three Delaware counties, seeks PSC approval for an overall $10.3 million, or 25.7 percent, increase in rates. Another two rate cases in 2023 resulted in the commission approving an increase of $4.1 million in rates for customers of a separate Veolia rate case, and $11.2 million for Artesian Water, which has about 90,000 customers across the state. In the 2023 cases, the PSC approved smaller rate increases than the utilities had applied for.
Artesian said it expects to request another unspecified rate rise this year to pay for PFAS filtration and other upgrades. “Artesian anticipates filing for rates in 2025 to recover our ongoing needed investments in infrastructure and rising costs, such as for energy and water treatment needs, including those related to PFAS,” the company said in a statement.
Underlying the rate-hike requests is a requirement for utilities to comply with strict new federal regulations on the presence of PFOA and PFOS, two commonly found types of PFAS chemicals, in drinking water. In April last year, the U.S. Environmental Protection Agency finalized the first national regulations on those chemicals, plus four other kinds of PFAS. The rules set much stricter levels than had been proposed by Delaware and some other states because of the chemicals’ links with serious health problems including ulcerative colitis, decreased response to vaccines, elevated cholesterol, and some cancers.
“The major driver of our rate request was compliance with the new regulations for PFAS chemicals and removing them from our source water,” said Bard. “We have been constructing a major plant upgrade, which consisted of a new building and 42 filters to service our Stanton Water Treatment Plant.”
The man-made chemicals have been used since the 1940s in a wide range of consumer products including nonstick cookware and flame-resistant carpets. They have also been heavily used in firefighting foam, especially by the military at bases like USAF Dover, where high levels have been found in groundwater. They are called ‘forever chemicals’ because they do not biodegrade, and accumulate in the body of virtually every American.
Consumers will likely be saddled with a significant share of PFAS-cleanup costs said Dr. Jerry Kauffman, director of the University of Delaware’s Water Resources Center and a long-time advocate for strict health standards for PFAS in drinking water, unless the chemicals’ manufacturers can be legally required to help foot the bill. In 2023, Delaware sued 13 PFAS manufacturers including 3M and Tyco for making the chemicals that went into firefighting foam, claiming the companies knew the substances harmed the environment and public health.
In Wilmington, which like other municipalities makes its own decisions on utility rate rises, the city administration is currently working on a six-year financial plan that includes capital spending needs such as keeping PFAS out of public water. The city, which has about 37,000 water customers serving some 117,000 people, “will also need to make capital improvements for PFAS,” said Kelly Williams, its commissioner of public works.
Whether the Trump administration’s EPA will leave the new PFAS standards in place is for now an open question in light of its efforts to scrap some levels of federal regulation, Kauffman said.
A similar question hangs over federal funds that have helped some Delaware utilities install PFAS filtration, Kauffman said. For example, the City of Newark used state-administered funding from two federal laws to help with the cost of PFAS treatment but it’s unclear whether such funds will be available to other utilities in the future.
“I’m trying to read the tea leaves,” Kauffman said. “They are cutting positions and rolling back environmental regulations and what else is next, but you don’t know until it’s been announced.”
In the legislature, higher utility rates for consumers would be addressed by three bills, introduced in February, that seek to change how the Public Service Commission decides on rate cases from the investor-owned utilities it regulates.
One of the bills, SB 59, would require the commission to make its decisions on the basis of a “prudent” standard which allows it to take consumer costs into account, rather than its current “business judgment rule” which does not allow it to deny a rate rise that is requested on the grounds of higher costs. Delaware is one of only two states where the utility regulator uses the “business judgment rule.”
“Amending the Public Utility Code so that the ‘prudent’ standard applies would give the PSC the ability to deny, in whole or in part, certain expenses and costs, which can lead to less frequent and less impactful rate increases,” according to a statement from the bill’s leading sponsor in the Senate, State Sen. Stephanie Hansen (D-Middletown).
Any such change would apply to utilities that provide electricity, natural gas or water, Hansen’s office said.
“Today, consumers are seeing the price for everyday necessities increase,” said Sarah Fulton, a spokeswoman for Hansen. “We need our Public Service Commission armed with a strong review standard to protect Delawareans from footing the bill for unnecessary utility costs."
PSC executive director Matthew Hartigan said the commission supports SB 59 but declined further comment.
One of the other bills, SB60, would cap recoverable capital expenses by Delmarva Power, and would not allow recovery for activities such as lobbying and political contributions. A third bill, SB 61, would seek greater transparency among states including Delaware that make decisions at PJM Interconnection, the regional grid operator.
“We all understand that prices go up over time but that doesn’t have to mean that families should have to pay higher rates just to over lobbying efforts or unnecessary corporate expenses,” said State Rep. Debra Heffernan (D-Brandywine Hundred), who sponsored the bills in the House. “These are common sense measures that will make sure our utilities are transparent, accountable, and charging consumers fairly.”
Gov. Matt Meyer signaled his support for Hansen’s three-bill package while announcing his own steps to address rising energy bills earlier this month
And while the fate of those bills is decided at Legislative Hall, some lawmakers are asking the Public Service Commission to reject current requests.
State Rep. Madinah Wilson-Anton (D-Newark), joining fellow legislators testifying Wednesday before the PSC against a proposed Delmarva Power gas rate increase, noted the expected Artesian request to raise its water rates this year. She says the various rate increases would be hard for some of her constituents to afford.
“I was made aware last week that in our area, our water utility is likely to ask for an increase as well,” she told the PSC. “We represent thousands of Delawareans. They don’t know what to do. We’re talking about people’s lives, their utility costs, into the foreseeable future. I urge that you reject this (Delmarva) rate increase and I know I’m early on the Artesian increase proposal, but I’d urge you to reject that one as well.”
