Utility seeks larger water fees

Aqua North Carolina asks to charge 20.4% more for water service and 16.4% more for sewer service.

Staff WriterFebruary 15, 2011 

Aqua North Carolina, the state's largest private water utility, is asking state regulators for a hefty rate increase for the second time in three years.

The move has roiled homeowners who already pay Aqua about $100 for typical monthly usage, twice as much as residents of Raleigh, Charlotte and other municipal utility departments. Now Aqua is asking for 20.4 percent more for water service and 16.4 percent more for sewer service, which would add $13 to monthly bills. In 2009 those fees went up 12.5 percent and 29.7 percent.

This time, homeowners are organizing and plan to stage a rally outside the N.C. Utilities Commission office in downtown Raleigh the day of the public hearing on the rates. The hearing date has not yet been set but could draw protesters from much of the state.

The utilities commission and state lawmakers are already receiving customer complaints, just three weeks after Aqua filed for its rate increases.

One irate customer is Jim Anthony, CEO of Colliers International, a real estate services firm in Raleigh. Anthony, who lives 60 miles southwest of Raleigh in Woodlake Country Club, charged Aqua with "outrageous profiteering," "price gouging," and "predatory pricing."

"The Aqua situation ... is outrageous abuse of consumers in my opinion," Anthony wrote to the utilities commission. "This case is a monopoly run wild."

Aqua serves areas without municipal hookups, including more than 400 subdivisions in Wake County. The company has about 88,000 water and sewer customers in North Carolina, and nearly 1 million nationwide.

Private water utility companies are known as "rate case machines," and Aqua stands out among them as the best in the business, said Angie Storozynski, a utilities analyst with the Macquarie Research firm in New York.

Aqua America, the Pennsylvania parent of Aqua North Carolina, is the nation's second largest private water utility. It is known for aggressively pursuing acquisitions of small water systems, and then putting money into infrastructure improvements, a practice that depends on "almost continuous rate filings," Storozynski wrote in a recent analysis.

"Best management in the sector, the highest realized returns," Storozynski said by e-mail, "simply a well-oiled machine."

Aqua's Cary-based president and chief operating officer, Tom Roberts, said his company is asking for the rate increase to recover nearly $25 million spent on system upgrades. Aqua is less efficient than large municipal water systems, he said, because it serves small communities that are spread out all over the state.

Aqua's smallest service area, Pine Burr in Catawba County, has just three connections. Aqua operates 1,315 water and sewer systems in 48 North Carolina counties.

"It's a way different model," Roberts said. "We're asking for recovery of money that we've already spent."

Edward Finley Jr., chair of the N.C. Utilities Commission, wrote to Anthony, the Raleigh executive, saying Aqua's rates are justified. Finely said the rates were based on audits, and he added that the commission favors Aqua's goal of achieving uniform rates for all its customers.

Aqua's subsidiary, Fairways, is requesting a 40.4 percent water rate increase and a 12.8 percent sewer increase in coastal areas. The systemwide average increase sought is 19.2 percent.

To argue its rate case before the utilities commission, Aqua has hired Jo Anne Sanford, the commission's previous chairwoman. In the rate filing, Sanford wrote that despite rate increases in 2005 and 2009, Aqua has been unable to achieve the profit it is authorized to make in North Carolina.

john.murawski@newsobserver.com or 919-829-8932

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