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Aqua Utilities Florida Gets Interim Rate Boost

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By CHRISTIAN M. WADE

The Tampa Tribune

Published: July 30, 2008

A year ago, Aqua Utilities Florida appeared before the Florida Public Service Commission with a request to raise rates for customers across the state, saying the move was needed to recoup an estimated $7.3 million in investments and upgrades.

State regulators didn't buy it.

The PSC staff recommended against the increases, and Attorney General Bill McCollum and the Office of Public Counsel filed a rare motion to dismiss Aqua's rate proposal.

In response, Aqua withdrew its request at a PSC meeting in Tallahassee in August.

At the time, company executives acknowledged they had problems with customer service and pledged to resolve those issues before requesting another rate increase.

On Tuesday, the regional utility, which serves about 3,200 customers in Pasco County, was before the commission in Tallahassee with a request to increase rates on an interim basis.

This time, however, the PSC board unanimously approved the increases, despite continued opposition to the proposal from utility customers, the attorney general's office and the Office of Public Counsel.

PSC commissioners argued that despite the complaints, Aqua was entitled by state law to seek an adequate rate-of-return on its investments in its water distribution system.

"It's not a perfect solution," said Commissioner Lisa Polk Edgar. "But the statue affords protection to customers in the form of refunds should the final rates not be granted."

In Jasmine Lakes, where Aqua serves about 1,500 households, the rates for customers who use an average of 5,000 gallons a month will rise from $25.19 to $40.92 for water, and $25.77 to $88.91 for wastewater, according to figures provided by the PSC.

Customers in the Palm Terrace and Zephyr Shores subdivisions will also see increases.

Aqua Customers Dissatisfied

As with the previous request, tales of customer dissatisfaction took center stage.

Charlie Beck, with the Office of Public Counsel, said complaints over poor service from the utility's customers are being heard in public hearings throughout the state.

"For whatever reason, they have been unable to correct these problems, and it appears to be a corporate policy for how they deal with customers," he said.

He urged the commission not to approve the interim rates, which for some customers could be as high as 350 percent for drinking water and 320 percent for wastewater.

"These increases are a real hardship on the customers," Beck said. "We think it's wrong."

Bruce May, an attorney for Aqua Florida, did not address the complaints, but argued that, on procedural grounds, his client was entitled to a rate increase.

"Commissioners, it would be absurd to suggest that we are not entitled to interim rate relief, " May said. The law of this land, the law of this state is clear ... and we're entitled to that."

Cecilia Bradley of the attorney general's office also argued against the rate increases and said the elderly and those on fixed incomes would be most affected by higher utility bills.

"We're not talking about a luxury. We're talking about water," she said. "We all need it."

In a request to intervene in the proceedings, the attorney general's office also cited concerns about the safety of the water provided by Aqua, claiming customers had complained about ailments from miscarriages to skin diseases and gastrointestinal illnesses.

"Many customers testified that they cannot afford to buy bottled water to use for cooking, drinking and bathing, and that they live in fear that they are poisoning their families by letting them bathe in or drink the water," McCollum wrote in the intervention request.

Aqua's attorney didn't address those claims, but said his client is prepared to rebut them at upcoming PSC hearings.

"Those are serious allegations, and my client takes them seriously," May said Tuesday.

In the previous round of proposed rate increases, Aqua, which hadn't had increased rates since 1995, had wanted to send higher water bills to the more than 100,000 customers across the state. The publicly traded utility hoped the rates would generate $7.3 million.

But Aqua withdrew its request amid a litany of criticism from state regulators.

The PSC also ordered the utility to refund customers more than $1 million in interim increases, including interest, which had previously been approved by regulators.

Recouping Operating Losses

This time around, Aqua said it needs to recoup more than $5.9 million, a 40 percent increase systemwide, to offset losses from its rising operating costs and upgrades.

The rates would remain in place until the PSC votes on a final increase early next year. If the board denies that request, customers will be refunded what they paid in interim rates.

The PSC staff had recommended approval of the interim increases, but whittled down the company's request to a 26.4 percent rate increase, an estimated $2.8 million.

The utility has invested more than $10 million statewide to improve its aging water and wastewater systems. More than $675,000 of that was spent in Pasco County, where Aqua services the Jasmine Lakes, Palm Terrace and Zephyr Shores subdivisions.

About three years ago, Aqua America, the nation's largest publicly traded utility, entered the Florida market, acquiring more than 60 water and wastewater systems from Water Services Corp. Based in Bryn Mawr, Pa., Aqua now serves 18 counties in Florida.

PSC Commissioner Nancy Argenziano acknowledged Tuesday that the company had invested millions on upgrades, but said many problems have not been fixed.

"I hope that people will be able to drink water they're paying for in the future," she said.

Editor's note: An earlier version of this story misquoted a statement to the commission by attorney Bruce May.

Reporter Christian M. Wade can be reached at (727) 815-1082 or cwade@tampatrib.com.

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