Aqua PA Says Rate Hike Request is Warranted

has filed a request to raise monthly water rates for a typical residential customer $5.08, it announced in a November press release.

Though Aqua requested the hike—which would raise the average monthly rate for its 400,000 customers to $57.72 and result in an additional $38.6 million of revenue for the utility giant—go into effect on January 18, the Pennsylvania Public Utility Commission (PUC) likely won't issue a final ruling until August, Aqua communications director Donna Alston told Patch.

"I've been here for 18 years, and I don't remember a time when they didn't suspend the request," Alston said, before adding that she also couldn't recall an occasion when the PUC—the regulatory body charged with overseeing the operations of public and private utilities—granted Aqua the full amount of the rate hike they requested.

In 2009, the occasion of the last "cost adjustment" the company applied for, the PUC granted it a 5.6 percent rate increase when it requested 11.8 percent—a difference in annual revenue of almost $20 million.

According to Aqua Pennsylvania president Karl Kyriss, the cost hike is necessitated primarily by the $450 million in capital improvements the utility provider has undertaken since its last increase request, many of which are infrastructure upgrades that improve drinking water quality.

"These improvements include the replacement and rehabilitation of more than 334 miles of aging water main, as well as valves, service lines and more than 1,000 fire hydrants throughout our 5,600-mile distribution system," said Kyriss in a press release.

As with any rate increase though, there are discontents. There is budding concern that the additional revenue won't just go to pay off capital improvement debts, or fund similar future projects, but finance Aqua's continued expansion.

Aqua customer and Bryn Mawr resident Ford Calhoun touched on this issue in an email he wrote to Patch last month.

"Aqua has purchased other water facilities to grow their business and its value to stockholders and executives. They've increased their dividend. They've collected a constant stream of cash from established customers forever. Now they need a 10% increase just to provide basic services? Doesn't add up," he wrote.

Alston admitted that while some of the money from the rate increase will doubtless go toward Aqua's acquisition of new territories, it will, due to company organization, only go toward the purchase of those in Pennsylvania. And the shared overhead that will result from this, she said, will create an economy of scale that will over time depress the price for all of Aqua Pennsylvania's customers.

In response to general concern that the increase is excessive (if allowed in full, it will cover the cost of Aqua's 2009-present capital improvements in fewer than 12 years), or that Aqua focuses on shareholder needs at the expense of its customers (CEO Nick DeBenedictis in the Spring that Aqua has raised its dividend 21 times in the last 20 years), Alston points to the cost of the service versus the value it provides.

Water is the most capital intensive utility to provide, she argued, and probably the most essential.

"When you lose electricity," she continued, passing along an anecdote she'd heard, "you pick up Chinese food and it's a fun night. When you lose water, all the romance goes out the window after that first flush."

Aqua Pennsylvania is, she reminded, a reliable provider of "the one thing you can't live without."