Water rate increase faces rough seas

Fairfield First Selectman Michael Tetreau waits his turn to speak during a public hearing on Aquarion’s proposed 23% rate increase. Next to him, holding a sign, is RTM member Michael Herley. (Shawn O'Sullivan Photo)

Fairfield First Selectman Michael Tetreau waits his turn to speak during a public hearing on Aquarion’s proposed 23% rate increase. Next to him, holding a sign, is RTM member Michael Herley. (Shawn O’Sullivan Photo)

Perhaps David Rosenstein of Southport best expressed the frustration of many who attended a June 18 hearing on a proposed rate increase when he said, “Water, water everywhere, but too expensive to drink.”

The crowd wanting to speak about a proposed 23% increase proposed by Aquarion Water Company spilled out of its assigned conference room and into the halls of Sullivan Independence Hall in Fairfield. The hearing was one of four sessions originally scheduled around the state, the only one in this area at which those who would be affected by the rate hike could share their opinions.

When Michael Herley, Fairfield RTM member, complained that the public was not being served by the proceedings, as many could not get in the room, Public Utilities Regulatory Agency Vice Chairman John Betkoski III announced that he would order another public meeting in Fairfield.

“I work out of town. I’m from Bridgeport,” Denise Anderson said. “Bridgeport has the largest populace in the state. Why isn’t there a meeting being held in Bridgeport? All consumers are important.”

Herley accused Aquarion of “trying to score a trifecta, raising the rates on residential, municipalities and local business. When you do that the victims are the consumers.”

“I am a small business owner in town as well as a representative,” Rep. Brenda Kupchick of Fairfield (R-132) said. “I can’t imagine adding a 20% cost to all of our services; I’d be out of business. This is not the type of thing where people can say. ‘I no longer want this thing.’ We need the water. People are understandably upset.”

The hearing, conducted by the Public Utilities Regulatory Agency (PURA), was presided over by Betkoski and Director Michael Caron.

PURA’s job is to “balance the public’s right to safe, adequate and reliable utility service at reasonable rates with the provider’s right to a reasonable return on its investment.”

Kupchick called for a line item explanation from Aquarion.

Aquarion declined to answer questions at the hearing.

“Twenty percent,” Fairfield First Selectman Michael Tetreau said, “is too much,” noting that the increase would mean $200,000 a year to the town.

“Does it really cost 20% more,” he asked, “to deliver the same water through the same pipes to the same people as it did last year?”

Tetreau questioned the stability of the company: “Twenty percent is just too big a number to be off in running a company or organization.”

Reminding PURA that 47 towns and more than 625,000 customers face the increase, Tetreau called for an independent financial review of Aquarion, “to certify that there are no leaks in the financial system, that there’s a proper a financial plan in place prior to any new increases. If this can happen this year, what’s to keep it from happening in future years? How do we know that our water system is safe, secure and financially sound?”

“Is our water supply in jeopardy due to lack of control or poor financial management?” he asked.

In its application to PURA, Aquarion cited such costs as significant declines in consumption and investments in system upgrades and infrastructure.

“We have been paying as ratepayers into an infrastructure cost for many years,” Kupchick said, referring to the Water Infrastructure and Conservation Adjustment (WICA), included in bills to cover replacement of water pipes and related systems.

Some speakers wondered if Aquarion might use the extra revenue to purchase several water companies at ratepayers’ expense. Others asked if infrastructure money might be directed toward paying for improvements to outdated systems, some asking if it would be in towns outside Fairfield.

Others alleged excessive executive salaries

Bud Morton said PURA should change the structure of its inquiry in order to look at the ultimate holding company.

“There are six levels of veils that apply before you get to the ultimate owners, which is an Australian private equity fund, Macquarie, and a British Columbian pension fund,” he said.

Aquarion was purchased by Macquarie, an Australian financial investment bank, in 2006.

“We need to look at the leverage of the ultimate holding company and the degree to which it is inflating our water rates here,” Morton said.

“Aquarion has been using high rate increases since being bought by Macquarie to enrich its top management, its private equity owners, and to finance its strategy of expansion for the sake of long-term revenue growth and earnings growth and ultimately higher corporate value for the owners,” said John Levinson, who has a background as a securities analyst.

Joseph Knapik of Shelton reminded PURA that the proposed increase was 18.8% above the rate of inflation.

“Approximately three years ago Aquarion received a 15% increase,” Knapik said. “Aquarion used the last increase to purchase several water companies at ratepayers’ expense. Let this monopoly pay for its own expansion, not the citizen ratepayers.”

Levinson also noted that for the nine years before Macquarie’s purchase there was a 0% increase in water rates. Since the company was acquired rates have gone up 31%, he said.

“Our pocketbooks can’t keep up with the increases,” Anderson said. “It impacts all of us.”

Tony Unger, a councilman from Monroe, reminded PURA of the many customers Aquarion has on fixed incomes.

“In the town of Monroe we have a lot of citizens who are unemployed or senior citizens on a fixed income. And when they have to look at a 23% increase, they don’t know where they are going to get it,” Unger said. “I am an Aquarion customer, and I have been on a kind of fixed income myself, and I share that pain.”

“I am a homemaker and I pay the bills. I can’t believe what’s going on,” Jenny Gillis said. “I looked through several years of bills. Even doing what we can to conserve the water, my bills have stayed the same. We are encouraged to conserve and be aware of this precious resource and now it’s being given over to a monopoly. I’m just disgusted.”

Among those displaced from the main room was state Senate Minority Leader John McKinney of Fairfield (R-28), who waited in the hallway.

“People can’t take it anymore. The cost of everything is going up — everything is going up except our salaries. People cannot continue to pay more and more, especially those on fixed incomes,” McKinney said.

“I would ask you to not to fall into the trap that this is pennies per day or dollars per month,” he added. “This is a 23% increase over three years and it’s simply unaffordable and unacceptable.”

He, too, raised the subject of where Aquarion was spending its money.

“I hope you will look at everything,” he continued, “from usage fees, service charges that have gone up in the past, surcharges that have been applied in the past, the fact that they have been acquiring companies, and whether these rate increases will go to pay for those acquisitions. As a regulated utility they have to be held to a different standard from a private company.

“People have just had enough,” McKinney concluded, “and they can’t pay anymore.”

While awaiting word of the additional hearing, Aquarion customers may send comments either in writing to PURA at 10 Franklin Square, New Britain, CT 06051, or by email to [email protected] Correspondence should be noted with docket number 13-02-20 so it can be entered into the testimony.

“The Office of the Attorney General is actively participating in the PURA proceedings, and we will examine the evidence and each aspect of the proposal to ensure customers pay no more than is just and reasonable,” Jaclyn Falkowski, executive assistant for press and communications at Attorney General George Jepsen’s office, said in a statement. “Aquarion’s rate increase application has, understandably, generated a tremendous amount of public opposition, as evidenced by the many hundreds of complaints filed with PURA in opposition to the proposal.”

Another public comment hearing will be held on Aquarion Water Co.’s proposed rate increases at Fairfield Warde High School’s auditorium on Tuesday, July 9, at 6:30 p.m.

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