NC Attorney General blasts water utilities that raise rates without public hearings

jmurawski@newsobserver.comJuly 3, 2014 

N.C. Attorney General Roy Cooper said in public filings his agency will challenge a new state policy that allows private water utilities to raise rates without formal reviews and public hearings.

The AG filed a notice of appeal with the N.C. Utilities Commission on Thursday and will follow up in the coming months with an appeal to the N.C. Supreme Court.

Aqua North Carolina, the state’s biggest private water utility, on Friday criticized the AG’s move.

“I have some confidence that we will prevail,” said Tom Roberts, Aqua’s president for North Carolina operations. “Aqua’s goal is to follow the rules and invest prudently to benefit our customers.”

Cooper has previously challenged the legality of electric rate increases granted by the N.C. Utilities Commission. The N.C. Supreme Court agreed with the AG in his first case against Duke Energy; the rest await rulings.

The state’s new rate policy for water utilities was approved by the Utilities Commission in May as part of a rate increase granted to Aqua.

Aqua, with 90,000 water and sewer customers in North Carolina, including more than 400 subdivisions in Wake County, pushed for the change as part of its rate case. Aqua is a publicly-traded utility based in Pennsylvania with local operations headquartered in Cary.

The AG, in his filing, scorned the Utilities Commission’s decision that more frequent rate increases were in the public interest. The AG’s filing said the Utilities Commission’s adoption of the accelerated rate mechanism was legally deficient, flawed and arbitrary.

The Utilities Commission “determines that the mechanism is in the public interest on the purported grounds that Aqua’s consumers indicated a desire for improved water quality, while not giving weight to the fact that Aqua’s customers objected almost unanimously to any rate increase,” the AG’s filing says.

Aqua has had three rate increases approved in the past six years and already charges rates that are twice as high as municipal water agencies such as Raleigh, Cary and Durham.

Roberts said Friday that the accelerated rate mechanism would allow up to 5 percent in rate increases before the company had to go in for a full rate case. At that rate case, the increase would be fully reviewed and could be disallowed if it was found to be imprudent.

Roberts said a similar rate recovery policy has been adopted in 14 states.

The company also issued a press release defending the policy, noting it is considered a “best practice” by the National Association of Utility Commissioners.

Rob Thormeyer, the association’s spokesman, said the policy was recommended in 2005 by state, federal and utility officials, at the request of the water utility industry, and published the association for regulatory agencies to consider.

“The release is a little misleading,” Thormeyer said of Aqua’s statement. “We didn’t ID it as a best practice, several other groups did. All we did was endorse those findings. It is up to the state to determine whether to adopt these kinds of mechanisms.”

Murawski: 919-829-8932

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