Aqua America's Florida Operating Subsidiary Reaches Settlement Agreement on Proposed Rate Increase
Aqua America Inc. recently announced that its Florida subsidiary,
Aqua Utilities Florida Inc., has reached a settlement agreement with
Florida’s Office of the Public Counsel and its Attorney General concerning the company’s
proposed rate increase. In a 5-0 vote, the Florida Public Service
Commission (PSC) approved a settlement agreement.
Aqua Utilities Florida (Aqua), which is the company’s ninth largest subsidiary serving less than 38,000 customers, comprises approximately 4 percent of Aqua America’s total customer base. Nearly one third of Aqua’s Florida customers are regulated by individual counties and as such are not affected by the settlement.
Also as part of the agreement, Aqua has voluntarily withdrawn its
revenue increase request of $7.3 million and its proposed
regionalization plan to consolidate the 80 small, spread-out water
systems into 15 county-based systems. Aqua will refund, in accordance
with Florida PSC guidelines, the interim rates the company has been
charging since mid-April.
Among the settlement terms, an agreement was reached to hold a
collaborative work session later this year with the parties involved to
discuss regionalization of rates. Rate consolidation was one of the key
issues in the case because of the expense and inefficiency associated
with filing a rate case in Florida where Aqua operates – in addition to its larger county regulated divisions - 80 separate, PSC regulated rate divisions.
“Although I am disappointed with the
ultimate outcome of this case, we remain encouraged about our future in
Florida. The company plans to continue its commitment to customers
through a sustained capital program, which will be openly discussed in
local Florida town meetings as agreed in the settlement,” said Christopher Franklin, Aqua’s President – Southern Operations.
Franklin added, “Many of these customers
have not had a rate increase since the early 90s. We have invested more
than $10 million to improve the systems since entering the state in
Aqua America expanded into Florida when it acquired the water and
wastewater systems owned by AquaSource, Inc., a subsidiary of Duquesne
Light Holdings, Inc. in 2003, and the water systems owned by Florida
Water Services Corporation, a subsidiary of Allete, Inc., in 2004. The
company did not pay a premium over net asset value for any of the
systems, most of which required significant capital additions to
upgrade facilities and address environmental issues. By 2006, the
majority of the systems were brought into compliance with Aqua’s
internal requirements as well as applicable federal and state
standards, therefore permitting the filing of the rate proceeding.
“The parties have agreed that an
inclusive workshop held with the Commissioners and Staff by the end of
the year is the most appropriate venue to discuss the various rate
consolidation options. The company looks forward to a productive
workshop that will provide clear direction on the process of
regionalization of rates in Florida,” said Franklin.