Water utility seeks to increase rates

Bills could double for many

Water utility Aqua North Carolina is seeking rate increases for about 70,000 suburban and rural customers throughout the state, some of whom haven't seen a rate increase in 18 years.

The average rate increase for households over the company's statewide service territory would be 38.9 percent, but the effect would vary greatly, ranging from as little as 5.5 percent in Chapel Ridge, a resort community in Pittsboro, to a whopping 251 percent for Beau Rivage, a golf course community in Wilmington. Cary-based Aqua charges different rates because it was built up through acquisitions of small water utilities that serve outlying areas that lack water or sewer service from local governments.

At a time of great economic uncertainty, some Triangle households can expect to double their water bills if state regulators approve Aqua's request.

* North Raleigh subdivisions served by Heater Utilities, an Aqua subsidiary acquired in 2004, would see a 26 percent water rate increase, or about $9.60 a month.

* In Mobile Hill Estates in Wake County, 35 water customers also served by Heater would pay 126 percent more, a monthly increase of $26.78.

* Governors Forest and Governors Village in Chatham County, where Aqua provides wastewater service to about 1,200 customers, would pay 95 percent more, an increase of $34.22 for typical monthly usage of 6,000 gallons.

Aqua, the nation's second-largest publicly traded water utility, is asking the N.C. Utilities Commission for permission to establish uniform rates as it merges its seven subsidiaries in this state. It wants to recover about $60 million invested in systems and equipment in the state since it began operating here in 2000. The company serves about 86,000 customers in North Carolina under a variety of names: Aqua, Heater, Fairway, Mountain Point and Rayco Utilities, as well as Glynwood Water Systems and Willowbrook Utility Co.

In Wake County alone, Aqua provides water or sewer service to 411 subdivisions.

The rate request will likely be questioned by the state's consumer advocacy agency, known as the Public Staff.

"I would be a little surprised if we agreed with what they asked," said Ken Rudder, who directs the Public Staff's water division.

Aqua is entitled to a reasonable rate of return, Rudder said, but the company has to demonstrate it invests prudently and operates efficiently. The Public Staff is analyzing Aqua's records to determine whether its request is justified. The Public Staff expects to submit an alternate proposal as early as mid-December. The utilities commission will hold a public hearing in Raleigh on Feb. 3.

The company hopes to start charging the higher rates by June. Many of the subdivision served by Aqua or its subsidiaries last saw a rate increase between 1995 and 2005. As a result, many customers are underpaying, said Tom Roberts, Aqua North Carolina's president and CEO in Cary. Customers should pay the same rate since they receive the same service, and the rates should be increased every few years, he said.

"We certainly won't wait 18 years for our next rate request," Roberts said.

Aqua is based in Pennsylvania and serves 3 million customers in 13 states.

The focus of the company's aggressive growth strategy is acquiring small utilities, pumping investments into the small waterworks and raising rates to pay for the upgrades. The company has won approval in other states to raise rates by $60 million this year. It is now seeking $21 million more, mostly in Florida and North Carolina.

"Aqua America stands in stark contrast to the stereotype of the sleepy water utility industry," analyst Ryan Connors of Boenning & Scatterwood wrote in an August report to investors. "Aqua shrewdly exploits the system to its advantage. The system encourages capital investment, and Aqua obliges at every turn."