GONZALES - Ascension Water Co., the major water provider on Ascension Parish’s east bank, wants an average 18 percent rate increase from its customers.
A subsidiary of the privately held Baton Rouge Water Co., Ascension Water serves unincorporated areas, such as Prairieville, and the town of Sorrento.
Ascension Water had 23,636 customers through August, a company official said.
Filed Aug. 17 with the Louisiana Public Service Commission, the company’s rate request cites capital costs to match population growth and a 2006 franchise agreement with Ascension Parish government mandating fire hydrants in subdivisions that lack them.
A hearing on the rate request is set for 9 a.m. Wednesday at the Galvez Building, 602 N. Fife St., Baton Rouge.
According to the rate application, Ascension Water wants an increase in its base and usage rates.
The monthly minimum rate, for the first 2,500 gallons or less of water, would rise by $2.30 from $11.95 to $14.24.
The rate for each additional 1,000 gallons would rise by another 46 cents, from $2.69 to $3.15.
For typical residential customers, who use an average of 5,897 gallons per month, proposed increases would raise monthly bills by $3.86, from $21.08 to $24.94.
Commercial users, who average 18,215 gallons per month, face a $9.52 increase, from $54.22 to $63.74.
Baton Rouge residents moving to Ascension Parish expect a first-class water system in a rural area with one-third the population density of Baton Rouge, said Hays Owen, vice president and secretary of Ascension Water.
“The water utility business is the most capital intensive business of all the utilities. It takes a lot of dollars to have a first-class water system,” Owen said.
Ascension Water also wants to raise a variety of other fees, such as for reconnections.
All proposed rate and fee increases would boost Ascension Water revenue 19.3 percent to $1.44 million and provide a rate of return of 8.4 percent, according to company filings.
The company had a 5.1 percent return on investment in 2010, filings say.
Parish President Tommy Martinez emphasized parish government is not a part of Ascension Water’s request.
“Whatever they are doing, they are doing on their own,” he said.
The request also asks for authority to pass on any future rate increases from company water suppliers to Ascension Water customers.
Between 2000 and 2010, the parish grew by 39.9 percent to 107,215 people, the fastest in Louisiana, according to the U.S. Census Bureau.
Owen said Ascension Water received its last rate increase in 2006.
Before that, the company had not sought an rate increase since it entered the parish market in 1994 through the purchase of Lambert Utilities.
Since 1994, Ascension Water has spent $53.4 million on improvements, including $18.7 million since the 2006 rate increase.
Owen said the company is finishing a million-gallon storage tank near the Interstate 10/La. 44 interchange to boost pressure in the Pelican Point and Darrow areas.
That improvement is being paid for with a special low-interest rate loan that cannot be used as the basis for a rate increase, company filings show.
No such limitation applies to the franchise fee agreement signed during Parish President Ronnie Hughes’ administration as local fire officials clamored for more and better hydrants.
The agreement requires Ascension Water to put 689 hydrants over six years into 184 subdivisions, an expense estimated at $6.7 million.
The subdivisions were built before hydrants and properly sized lines were required, parish officials have said.
Owen said the company has installed 537 hydrants under the franchise agreement and new water lines, spending $5.37 million so far.
Under the agreement, Ascension Water has a 5 percent franchise fee on bills and remits collections to the parish over the life of the 20-year agreement.
Parish government, in turn, pays the company $300 per hydrant in the parish annually.
The parish health and utilities director, Kenny Matassa, said franchise fees end up going back to Ascension Water to put in fire hydrants.
Ascension Water has remitted about $1.15 million in franchise fees to the parish from 2007 to 2010, Owen said.
Parish hydrant fees paid for 21 percent of Ascension Water’s hydrant costs under the franchise agreement, he said.
Ascension Water and parish officials developed the agreement and under no scenario did hydrant fees cover installation costs, Owen said.
The agreement limits parish government costs and provides an incentive - through hydrant fees - to expand water service, Parish Attorney Jeff Diez said.
When asked if the agreement might have led to a rate increase, Diez said parish officials controlled as many variables as possible but rate increases several years later could not be anticipated.
“From the parish’s standpoint, we have not placed the onus of this on anyone. What we have done is guarantee 689 hydrants in areas that there would otherwise not be any and get (water service) expansion in the parish,” Diez said.