The Edgeworth Water Authority (EWA) entered into a 20-year agreement to purchase water from the Ambridge Water Authority (AWA) beginning in January 2001. This contract expired in December 2020. Both EMA and AWA have faithfully fulfilled their obligations. AWA has reliably delivered high quality water that met our daily requirements.
In 2019, the EWA entered into negotiations with the AWA to extend the contract. From the outset, AWA made it clear that they would only extend the contract at a substantially higher rate. The EWA Board met with other potential water suppliers, but after considering the quality and cost of water, along with the capital expenditures required to connect with alternative suppliers, the Board determined that a new contract with AWA was its preferred course of action.
Effective January 1, 2021 our cost of water purchased from AWA will increase by 30% increase. In subsequent years, the cost of purchased water will increase 15% each year until the rate paid by EWA is equal to the rate paid by AWA domestic customers. The cost of purchased water represents 35% of our total operating expenses.
The EWA is committed to maintaining the physical integrity of the supply system. Our objective has been to identify and fund the authority’s capital investment requirements on a timely basis. Annually the EWA staff and Board work with its consulting engineer to determine the priorities for the capital expenditures. We have been operating in a manner that is consistent with the Long Range Plan which was developed to identify significant capital projects. In an effort to reduce its own investment in its capital needs, the Authority has applied for available grants. In 2020 the EWA was awarded a grant in the amount of $320,710 to replace a portion of the main line along Main Street in Fair Oaks. This grant represents 60% of the project cost. The Authority also awarded a $100,000 grant to replace the water line for East Drive in Edgeworth. The receipt of these grants provides a benefit to all EWA customers.
As we all know, 2020 was a dry summer. This weather condition resulted in better than expected financial performance as water usage was higher than normal for many of our customers.
The benefits from the better than predicted financial performance, and the successful grant applications have allowed the authority to limit the increase in water rates to 6% beginning January 1, 2020. This rate increase will raise the minimum cost of water by approximately $3.48 per quarter for general service, or $3.90 per quarter for high service customers.
The Authority will continue in its efforts to limit increases in rates, manage costs, and prioritize capital improvements. Even with a 30% increase in our cost of purchased water, we were able to limit the rate increase to our customers to 6%. Unfortunately, we have no assurance that we will be successful in winning future grant applications or that our customer’s water usage will continue at higher than normal levels.
We hope that this memorandum will provide our customers with a better understanding of the reasons for the rate increase. We will continue to keep you informed. Please visit our website for news and updates.