The N.C. Supreme Court has upheld a state policy that allows private water-and-sewer utilities to raise rates without holding public hearings.
The court said North Carolina’s policy, established by the state legislature and adopted by the N.C. Utilities Commission, serves the public interest by allowing private waterworks to recoup expenses for infrastructure improvements needed to upgrade drinking water quality.
The policy had been requested by Aqua North Carolina, the state’s largest private water utility with 90,000 water and sewer customers in the state, including more than 400 subdivisions in Wake County. The policy was approved by the Utilities Commission in May 2014.
N.C. Attorney General Roy Cooper had appealed the Utilities Commission’s ruling, contending it would encourage Aqua to rack up expenses and pass on the costs to customers. Cary-based Aqua already charges about twice as much as Raleigh, Durham, Cary and other municipal water systems.
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But the Supreme Court said the Utilities Commission “thoroughly explained how Aqua’s use of a rate adjustment mechanism would benefit Aqua’s customers.”
Under the Utilities Commission’s 2014 ruling, Aqua and other private water utilities can raise rates up to 5 percent for certain infrastructure improvements without holding public hearings. After the water utilities go through a full rate case, which would include lengthy public hearings, they can go through another cycle of rate increases up to 5 percent without public hearings.
During a full rate case, all water utility expenses would be reviewed, including the infrastructure upgrades, so the expenses would not bypass regulatory review, Aqua contended.
The rate increases without public hearings apply only to certain infrastructure improvements on existing pipes and pumps, but are not allowed for construction of new projects and extensions. Typical infrastructure improvements involve projects to filter out naturally occurring iron and manganese from groundwater.
North Carolina’s rates policy applies to private water utilities, not to municipal water agencies. More than a dozen states have similar policies for water utilities.