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ALEXANDRIA, Va. — Virginia American Water has agreed to scale back the rate increase it sought last fall, settling for a $16.3 million annual revenue increase rather than the roughly $22 million it originally requested. The city of Alexandria, which formally opposed the increase, is among the parties that signed the deal.
The settlement, filed June 5 with the Virginia State Corporation Commission, was negotiated by the company, commission staff, the cities of Alexandria and Hopewell, Prince George County and the Hopewell Committee for Fair Water Rates. The Office of the Attorney General's Division of Consumer Counsel did not join the agreement but told the parties it does not oppose it.
Under the agreement, a typical residential water customer would see a water bill increase of about $9 a month, according to the settlement — down from the roughly $11 the company projected when it filed in November. In Alexandria, only the water increase applies, because the city receives wastewater service from AlexRenew rather than Virginia American Water.
The deal also sets the company's return on equity, a measure of its allowed profit, at 9.75% — below the 10.5% Virginia American Water had requested. The overall increase breaks down to about $14.2 million for water service and $2.1 million for wastewater statewide. The company has said the request is driven by about $115 million in infrastructure investment between May 2025 and April 2027, including water treatment plant upgrades, pipe replacement and other system work.
Mayor Alyia Gaskins announced in late May that the city had intervened in the case, telling residents in a video that Alexandria was fighting to keep the increase "as low as possible." The city's opposition was laid out in testimony filed in April by Ryan Freed, Alexandria's climate action officer.
Freed told the commission the proposal would cause "rate shock," noting that the rate charged to Alexandria customers had risen more than 260% in four years — from about 35 cents per 100 gallons in early 2022 to a proposed $1.26. He argued the increase would fall hardest on residents of multi-family buildings, who make up the large majority of Alexandria households and often cannot reduce their water use, and contended that the company has a pattern of turning to the General Assembly to override commission decisions it has lost.
"Water is not an optional service; it is required for the health and well-being of all," Freed testified. "Alexandrians will be paying considerably more for a vital service without seeing any improvement in service or increase in quality."
The case drew more than 100 written public comments before the comment period closed June 3.
The State Corporation Commission held an evidentiary hearing in the case Wednesday in Richmond. Because the parties have reached a settlement, they were expected to present it to a hearing examiner, who will issue a recommendation; the full commission must still approve the agreement before rates become final.
Interim rates took effect May 2 and will remain in place until the commission issues a final order. Any difference between the interim rates and the final approved rates will be refunded to customers with interest.
Virginia American Water, a subsidiary of American Water and the largest investor-owned water utility in the state, serves about 384,000 people. The company has pointed customers to assistance programs, including its H2O Help to Others program, which offers grants of up to $500 a year for income-eligible customers, available through the MyWater portal at virginiaamwater.com.
Editor's note: This story will be updated following Wednesday's evidentiary hearing in Richmond.
