A company that provides water and sewer service to thousands of rural Gaston County residents wants to raise its rates for the third time in five years.
Aqua North Carolina, the state’s largest private, for-profit water utility, is asking the N.C. Utilities Commission for permission to raise its rates by 19.5 percent.
For Aqua’s roughly 80,000 customers statewide, that would raise the average monthly water bill from $42 to $52, and the flat fee sewer customers pay from $65 to $75 per month.
Company leaders say yet another increase is needed to recoup money they have already invested in improving their systems, and to account for the higher cost of providing utilities to hard-to-reach, rural communities.
“This is the way all utilities work and Aqua is no exception,” said Aqua N.C. spokeswoman Gretchen Toner. “Utilities spend money up front and then request money for reimbursement.”
But Aqua is also lobbying for state permission to raise rates in the future without public hearings, which are now required. And its customers and their nonprofit advocates, such as Clean Water for North Carolina, say the utility is demonstrating greed and going too far.
“These high rates go beyond what’s necessary, and are particularly harmful to low-income customers and small households,” said Katie Hicks, assistant director of Clean Water for North Carolina.
State utility laws are failing to protect the public from large, aggressive corporations, which are “skilled at securing rate increases without necessarily investing funds where they’re needed most,” Hicks said.
Pattern of rate hikes: Aqua serves customers that do not live near city water supplies. The North Carolina operation, centered in Cary, is owned by the Philadelphia-based Aqua America.
It serves more than 90,000 households in North Carolina and has customers in 52 counties across the state.
In Gaston County alone, Aqua serves 106 subdivisions and communities of various sizes, according to the company website.
The company regularly requests rate increases on the basis that it is seeing higher costs for supplies, materials and labor. In 2011, the water utility requested a 19-percent increase, but state regulators only agreed to a 5-percent hike.
When Aqua NC makes such a request, engineers from the Utilities Commission’s consumer arm, the Public Staff, evaluate it. One of the things they review is whether the company overspent for materials.
If Aqua spent $25 for a filter that should cost $12, for example, the Public Staff can recommend approval of an increase that covers the $12 cost, not the $25.
Hicks said Clean Water for North Carolina strives to protect the most vulnerable residents who live in rural areas and often have low incomes.
“We’ve heard from a lot of Aqua’s customers who are upset,” she said, citing not only high rates, but poor water quality and service they receive. “One of the most glaring examples is in the Yorkwood subdivision (off Stagecoach Road in Gaston County).
“Their water quality is very poor with iron and secondary contaminants that are legal strictly speaking, but I think most people would agree make it undrinkable.”
Justified costs?: Hicks categorized Aqua America as a very profitable company that has paid dividends to its shareholders for some 25 years. It gets special incentives from the state to buy up small, rural and suburban water and sewer systems, where it can earn a high rate or return on its investments, she said.
Aqua customers already pay some of the highest water and sewer bills in the state — about 68 percent higher than the weighted average for monthly water bills, and about 89 percent higher than the average for sewer bills, according to the UNC Environmental Finance Center.
Tom Roberts, president of Aqua N.C., said it’s unfair to compare Aqua’s rates to those of larger public systems such as the city of Gastonia’s. Their business model is completely different, he said.
“In general, Aqua serves communities that wouldn’t be served by a utility if not for a company like ours,” he said. “Our average community has less than 100 customers.”
Roberts said Aqua is only trying to make its service stronger across the board.
“We are certainly sensitive to the fact that there are lots of people who are still struggling,” he said. “But rate increases are the only ability we have to recover expenditures we’ve made and true-up our operating expenses.”
Hicks said Aqua’s argument falls flat. Evidence has shown it buys small, rural systems that are in need of repair, and then never makes adequate upgrades, she said.
“A lot of these customers have seen no improvements and yet the rates continue to creep up,” she said. “Until the public can see the investments that have been made — and in fact have a say in what the priorities are — they’re not really proving to their customers their water is worth what they’re paying for it.”
You can reach Michael Barrett at 704-869-1826 or twitter.com/GazetteMike.
What: N.C. Utilities Commission hearing
When: 7 p.m. Tuesday (preceded by a 6 p.m. customer rally)
Where: Mecklenburg County Courthouse, Courtroom 5310, 832 E. Fourth St., Charlotte
Why: Aqua North Carolina, the state’s largest private, for-profit water utility, is asking for permission to raise its rates by 19.5 percent
More info: Any Gaston County customers of Aqua who wish to attend and speak at the hearing may do so.