We want you to understand the facts about the rate impact of a sale by the CWA to Aqua. It’s important to note that Aqua Pennsylvania’s President Marc Lucca stated before the CWA board and all attendees at the October public meeting that Aqua will freeze rates for all current CWA customers at their current rate for 10 years from the time the sale goes into effect. We also want you to understand the basics of how rates are set and regulated. Please see below for more information.
As a regulated water utility, Aqua’s water and wastewater rates are set by the Pennsylvania Public Utility Commission (PUC), which balances the needs of consumers and utilities; ensures safe and reliable utility service at reasonable rates; and protects the public interest. Before setting rates, the PUC follows a process in which the public has an opportunity to have its voice heard, and we believe that’s a good thing for everyone.
Our rates are based on the true cost of service, such as building and improving the infrastructure that enables us to deliver high-quality drinking water, and treating and returning wastewater responsibly to the environment. Across the country, our customers pay about a penny a gallon for drinking water.
Water companies are in the business of providing water services – taking water from its surface or underground source, treating it appropriately, and then delivering it safely and reliably to your tap.
Here are four key facts about rates that are important to understand:
Most states in the U.S. have a government body – a public utility commission – that sets water rates for regulated water systems. The PUC ensures that regulated water systems have rates that are fair and warranted.
Rates are established based on the total cost of running the water system. Factors that affect costs include capital investments, water treatment needs, and transmission and distribution costs. Water companies such as Aqua Pennsylvania cannot increase rates without public input and utility commission approval.
The process by which the PUC sets rates is called a “rate case.” Following rules and regulations that have been developed over the last 100 years, a rate case requires Aqua Pennsylvania to prove to the PUC that its costs are justified and its rate request is fair.
If the regulated utility needs to raise rates, it must first provide public notice and submit documentation to the PUC to prove that the increase is necessary. Rate increases typically occur to cover the costs of infrastructure investment. These investments can include: replacing water mains, water hydrants and tanks, and updating and maintaining water treatment facilities.
Once the PUC has thoroughly analyzed a rate case, it makes a final ruling, granting, modifying, or denying a rate proposal as it sees fit.
Only regulated water systems must go through the public rate case process to prove their costs are justified and their rates are fair. The rate case process requires the release of supporting documentation and open public hearings to allow customers, elected officials and other stakeholders to ask questions, raise objections or simply voice their concerns. Municipal systems do not need to substantiate their rates to a third party or provide for public input.
Your water rates won’t go up just because Aqua is operating your system. Regulated utilities such as Aqua Pennsylvania have strong incentives to operate as efficiently as possible by leveraging our economies of scale. The main driver of rate increases is investment to improve or rehabilitate the infrastructure needed to provide better and more reliable service, and rate increases are always decided with public input and the approval of the PUC.