The state Public Utility Commission on Thursday approved a 9.4 percent rate increase for customers of Pennsylvania American Water Co., less than the 16.4 percent increase the company initially requested.

The increase, the first in four years for the water utility, will boost the monthly bill of a typical residential customer using 3,630 gallons per month by $5.22, from $55.63 to $60.85. A typical wastewater customer’s bill will increase $7.97, or 14 percent, from $56.96 to $64.93. The new rates take effect Jan. 1, writes Andrew Maykuth for philly.com. 

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Pennsylvania American has 650,000 customers in 400 communities, including 44,000 in the Philadelphia suburbs.

The company said it needed the rate hike to pay for $1.26 billion in investment to replace and upgrade aging infrastructure.

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Water-service rates are based on the real costs of treating and delivering water to customers, and are regulated by state public utilities commissions (PUCs). In Pennsylvania, rates must be approved by the  Pennsylvania Public Utility Commission, according to the company’s website.

To determine rates, we work with PUC staffs to study costs of construction, maintenance, operation, administration and financing. Once the studies are complete, the company and PUC present any differing conclusions before an administrative law judge. Based on the judge’s opinion, the PUC sets the water rates.

Rates charged for service may vary based on a customer’s meter size. All customers pay the same rate for water usage. Customers are billed based on a regular meter reading, either monthly or quarterly for residential customers as well as for commercial and other public authority customers.

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