DV Journal

Delaware Valley residents are feeling the financial pinch. They’re not only paying higher prices for gasoline and food. Now their utility bills are also skyrocketing.

Cheltenham resident Elizabeth Tsingelis opened her combination water and sewer bill from Aqua PA last month to find it went from $43 to $184.

“My sister (who lives around the corner) had a $90 water bill and it went up to $315,” she said. “We were three people here in the summer. Her family is five people. And we don’t understand where it’s coming from.”

Wholesale utility prices (the price at which energy suppliers pay for water, gas, and electricity) have risen due to an increase in global demand as major economies have simultaneously climbed out of the pandemic-induced recession. The price increases have risen steeply since October 2021. Natural gas prices have hit a record high as the world emerges from a lockdown.

Utility companies are now passing that cost on to consumers.

“Power generators that had been shut down could not ramp up in time to meet renewed demand,” says Jonathan Stern of the Oxford Institute for Energy Studies. Electricity demand is set to increase further as a result of rising household incomes and growing demand for digitally connected devices and air conditioning.

After falling by about 1 percent in 2020 due to the COVID-19 pandemic’s impact, global electricity demand is growing by close to 4 percent in 2022 – driven by the global economic recovery– according to the latest edition of the International Energy Agency’s semi-annual Electricity Market Report. Most of the increase in demand is expected to come from the Asia Pacific region, primarily China and India.

The Pennsylvania Public Utility Commission (PUC) has approved what it called substantially lower than requested increases in rates for water and wastewater services provided by Aqua PA Inc. (Aqua Water) and Aqua Pennsylvania Wastewater Inc. (Aqua Wastewater), headquartered in Bryn Mawr.

The commission voted 3-0 on May 12 to approve an increase in annual revenue of approximately $50.51 million (9.88 percent) for Aqua’s water service and an increase in annual revenue of approximately $18.74 million (50.55 percent) for wastewater service – approximately 30 percent lower than what the company originally requested.

The PUC announced utility rates rose last June 1 from 6 percent to 45 percent for those consumers who don’t shop for suppliers in the online marketplace.

Aqua serves parts of Berks, Bucks, Montgomery, Delaware, and Chester Counties. Aqua Wastewater provides wastewater service to approximately 40,284 customers in portions of more than 40 municipalities throughout 15 Pennsylvania counties. The two companies serve nearly 1.5 million people throughout the state.

“Our May 2022 rate increase request was made to cover the three-year period of major capital investment and operating expenses since our last request in 2018,” said Chris Franklin, Essential chairman and CEO. “The overwhelming majority was related to our capital investment of $1.1 billion (through the future test year of 2023) to improve water quality and customer service, including a new financial reporting system, SAP, to replace the company’s 25-year-old software, and reliability for about 490,000 water and wastewater customers throughout Pennsylvania. We also opened a new state-of-the-art environmental laboratory in 2021 to help us continue our long history of providing safe drinking water to our customers and returning clean wastewater to the environment.”

Franklin added, “Inflation was generally estimated in our operation and maintenance costs, but not at today’s current rates. However, Aqua is not currently passing on those additional costs to customers.”

Most Aqua residential customers using 4,000 gallons a month currently pay an average of $69.35 for water and $55.51 for wastewater. Most receive only water service.

The precise impact on Aqua customers was filed in a required tariff report filed by Aqua in July which spelled out new charges for various rate zones across Pennsylvania.  The PUC’s policy is to gradually unify charges across its system so that the costs are shared equitably among all customers. Under that policy, customers in low-rate towns acquired by Aqua will eventually see their rates rise to match the majority of customers.

“For electric and gas in the Delaware Valley, PECO negotiates for lower energy prices. It does not generate electricity, it’s a distributor,” says Greg Smore, senior manager of communications.

“New and higher gas costs influence electric rates for the year. Prices are adjusted quarterly to current market trends – the rising costs of everything else – increased electric supply costs, and geopolitical issues (like the war in Ukraine). It costs power plants more now to produce electricity,” he said.

Natural gas is the plant fuel supply source that is trending higher now. It is the main cost for power plants to produce more electricity. Costs are then passed along to what PECO pays for supply, and passed along at the lowest price possible. But natural gas was lower for consumers in September, falling to 0.81790 cents per centum cubic feet (CCF). However, electricity increased by $6.10 per customer for the average usage of 700 kWh. These past summer months energy increased in usage due to higher air conditioning use.

PECO consistently encourages customers to use company energy efficiency programs and 12-month budget billing assistance programs. Despite rising than normal consumer pricing, there was no increase in customer complaints, which remained steady. Smore indicated, “We’re not seeing a significant increase in customers not being able to pay their bill, but we are encouraging customers to take advantage of financial assistance and bill relief programs.”

An advocacy group known as Keep Water Affordable, led by co-founder Bill Ferguson, is fighting the trend of utilities buying municipal water and sewer systems. Ferguson said Aqua Water and PA American Water, which he called “Big Water,” have a primary mission to acquire distressed municipal water systems at a “fair market value” and turn a profit.

“State regulation offices have stacked their efforts against local citizens,” he told the DVJournal. “This isn’t a fair system to ratepayers. Real users are seeing large rate increases as a result,” he noted. In the recent past, he attended public meetings involving Bucks County, Tredyffrin Township, and Chester Water Authority (CWA) to express objections to those municipal water systems being bought by “Big Water.”

His advocacy group’s efforts helped stop the Bucks County and Chester Water Authority municipal water systems not being sold to “Big Water.” Tredyffrin Township’s municipal sewer system was, however, purchased by Aqua PA. Area residents are mounting a major effort to try and stop municipal water buyouts through a state Supreme Court case, he said.

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The message was simple: Just say NOPE to Aqua PA’s bid to buy the Bucks County Water & Sewer Authority’s sewer system for $1.1 billion.

It was expressed during a Neighbors Opposing Privatization Efforts (NOPE) virtual town hall meeting last Thursday. It was a response to the authority’s July 13 vote to give Aqua one year of exclusive rights to buy its sewer system and recommended it as the purchaser.

Aqua PA officials welcomed that development.

“We look forward to discussing the merits of the transaction to BCWSA customers and employees in the coming weeks,” said Essential Utilities Chairman and CEO Christopher Franklin.

Not so fast, NOPE members say. They are marshaling their forces to speak out at the next BCWSA meeting on Wednesday and a future meeting of the Bucks County Board of Commissioners meeting. They say the sale will hurt customers by increasing their costs.

“We just have to get the word out,” said NOPE co-founder David McMahon of Norristown. “Once people are aware this (privatization) is in their future, they rally.”

McMahon says Aqua is not buying the Bucks County sewer infrastructure as much as it is buying the system’s customers. Those customers will keep paying for the water and sewer services forever.

The state legislature passed Act 12 in 2016 which permitted private companies to purchase publicly owned utilities at “fair market” value and to recover the costs through their rates. That set off a feeding frenzy of private-sector acquisitions of public water systems.

Unlike publicly owned utilities, private companies can charge their customers for the cost of the purchase in addition to the cost of the sewer or water service. They also must make a profit.

BCWSA customers aren’t just in Bucks County. They can also be found in Upper Dublin and Springfield in Montgomery County and West Vincent in Chester County.

“It’s really distressing how much power Aqua has,” said Mahon.

Bill Ferguson, co-founder of Keep water Affordable, says the recent acquisitions all have the same problem. The private companies purchasing the assets “add no value and extract large profits,” he said. “The customers should have the right to vote on the proposed sale.”

They allow the companies to increase ratepayer costs. The utility companies offer sellers a large amount of money but they can raise rates to cover it, he said.

“The profits alone will cause your rates to double,” said Ferguson added.  When that happens township or county officials can “shift the blame to Aqua.”

While the companies promise rate stabilization, they can also then go to the Public Utilities Commission to get increases.

“They add no value and extract large profits,” he said. “The customers should have the right to vote on the proposed sale.”

Tony Bellitto, executive director of the North Penn Water Authority and a past president of American Water Works Association, also spoke.

“Private companies are not just buying infrastructure,” said Bellitto. “What they’re buying is the customer who will provide a constant revenue stream.”

And there is an incentive for the sellers to get as much as possible and the buyers also do not mind paying high prices, since they can turn around and charge the customer, he said.

“They’re going to get back whatever they pay and more,” said Bellitto.  While BCWSA says customers will only pay $20 more a month “that is a complete fabrication,” he said. “Don’t believe it for a second.”

“At the end of the day this all comes down to the (Bucks County) commissioners,” said McMahon. “This doesn’t pass without their approval. The commissioners have every right and duty to prevent it.”

Elizabeth Fleschar, a water chemist who lives in Peddler’s View in Horsham, said her subdivision is already serviced by Aqua PA.

“Our rates have increased fantastically,” she said. She noted that only the first 2,000 gallons used are at the lower rate, while the rate “then escalates.” And there have been water quality issues, too, she said.

“There is no question in my mind there is some very serious dark money changing hands to get Aqua to a monopoly. We are a cash cow for Aqua. Their cost to run it is half what we’re paying.”

However, a spokesperson for Aqua PA sent a statement, rebutting NOPE’s contentions.

“Aqua Pennsylvania is excited to have been selected by the board of the Bucks County Water and Sewer Authority as its potential partner for the sale of its wastewater operations.

“As part of our proposal to BCWSA, Aqua has committed to maintain BCWSA’s sanitary wastewater rates in effect at closing for the first year after the acquisition or until after Jan. 1, 2025 (whichever occurs first).  We understand that BCWSA anticipates that a portion of the sale proceeds from the acquisition will be contributed to a fund maintained by either Bucks County or BCWSA to minimize rate increases over the next 10 years.

“We appreciate that the BCWSA board, as well as the county commissioners, municipal leaders, and most importantly, customers, are interested in conserving long-term rate protection and we are ready to engage with them as it’s always been our goal to ensure affordable rates for our customers.”

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