Aqua America Chairman pleas for close financial scrutiny of investor- owners of water utility systems
Pa.--(BUSINESS WIRE)--Nov. 3, 2005--Aqua America, Inc.
investors typically form organizational structures that are
controlled by one or two general partners who could have
significant influence over the funding that's available for
investing in infrastructure improvements," DeBenedictis
told leaders of the water utility industry attending the Third
Annual National Drinking
"It is my
belief that utilities should be governed ultimately by
independent boards of directors and professional water utility
managers who are driven by a long-term commitment to
customers," he said. "This means they must be
committed to the industry, their company, their employees and
capital investment plans - and not to
"It is unwise to put our precious water supply resources in the hands of strictly financial buyers who bring no operating experience and an ownership horizon that sometimes is as little as five years," said DeBenedictis, noting that the EPA reported this year that $277 billion will need to be invested over the next 20 years to upgrade and maintain the nation's water infrastructure.
He referenced two
cases this year in which state regulators rejected planned
acquisitions by financial buyers of electric utilities. The
Oregon Public Utility Commission (OPUC) denied the proposed
takeover of Portland General Electric Company by a group of
private investors. The OPUC found that the transaction was not
in the public interest because of short-term ownership, lack of
transparency and excessive debt. Meanwhile, the Arizona
Corporation Commission (ACC) turned down the acquisition of
Tucson Electric Power Company by a different group of private
investors. The ACC found that oversight
"Proper corporate governance standards and a commitment to the utility industry are needed to ensure that the interests of the customers, employees and communities are being addressed," he stated. "As regulators, you should demand that companies acquiring water utilities demonstrate a track record of environmental professionalism and efficient capital investment plans that bring long-term dedication to the communities and customers they serve."
DeBenedictis also urged regulators to closely analyze the transparency and organization of financial investing entities that have shown interest in the water market. "Given their sometimes complex organizational structures, these financial/legal entities could lack the transparency that you expect from a traditional utility holding company."
Aqua America, Inc. is the largest U.S.-based publicly-traded water utility, serving more than 2.5 million residents in Pennsylvania, Ohio, North Carolina, Illinois, Texas, Florida, New Jersey, Indiana, Virginia, Maine, Missouri, New York, and South Carolina. Aqua America is listed on both the New York and Philadelphia Stock Exchanges under the ticker symbol WTR.