Water Industry News

Aquarion rate request for Greenwich opposed by CT Attorney General

By Louis Porter
Staff Writer

August 20, 2004

State Attorney General Richard Blumenthal is trying to block a proposed 14 percent rate increase by Aquarion Water Co. of Connecticut.

Aquarion, whose parent company is United Kingdom-based Kelda Group, wants to increase water rates to offset about $150 million in investments made in the past eight years, according to the company.

The rate increase would cost Aquarion's 174,000 customers about $16 million a year. Blumenthal said the increase is unnecessary.

"Maintaining Aquarion's rates at their current levels will provide rates that are just and reasonable," Blumenthal said in a brief filed with the state's Department of Public Utility Control, which is evaluating the rate increase.

The department will have an initial decision on the case by Sept. 27 and a final decision by Oct. 27, said Beryl Lyons, spokeswoman for the DPUC. Blumenthal's office is a participant in the case, she said.

The DPUC establishes how much utilities such as Aquarion can make on the money they invest in their systems. The 11.25 percent rate of return requested by Aquarion is "grossly excessive," the attorney general said.

Blumenthal's brief says the company should control capital spending and only get a 9.5 percent rate of return, as recommended by the office of the consumer counsel.

Aquarion also has not given customers their full share of the profits from a $90 million land sale to the state, Blumenthal said. Aquarion has kept much of the customers share of that money -- about $4.9 million -- as an "interest-free loan" and proposes to keep it until the next rate case, Blumenthal said in a statement.

Aquarion spokeswoman Adrienne Vaughan declined to comment on Blumenthal's brief.

"Aquarion, since it last filed for a rate increase in 1996, eight years ago, has invested $151.5 million to improve the water system throughout the state of Connecticut," she said. "That investment was made not because this is an inefficient company."

Aquarion is requesting an increase in its rate of return in part because of its good management. Blumenthal said that request also should be rejected.

That increase for management would result in a $1 million increase in costs to ratepayers, according to the attorney general's brief.

The DPUC "should reject this proposal as simply a $1 million a year give-a-way by rate-payers to the company," it states.

Aquarion already has an obligation to provide excellent service in exchange for collecting rates approved by the DPUC, according to the brief. "To the contrary, the record in this proceeding shows that Aquarion has shown a pattern of ignoring repeated customer complaints and then acting to correct the problem only after the intervention of the DPUC," according to Blumenthal.

Vaughan said only about 34 customers spoke out against the increases in a series of hearings on the issue around the company's service area, she said.

"They understand the value of pure, abundant drinking water," Vaughan said. "That is why the DPUC is there. They have considered the application and they will make a decision that is fair to our customers and the Aquarion Water Company."

In Stamford, Blumenthal's objection to the rate increase is being followed closely said Ben Barnes, the city's director of administration.

"Unfortunately, we don't have the resources to do the kind of analysis that the attorney general has done on their proposal," Barnes said. "I have to rely somewhat on his conclusions, but it does match up with what I suspected."

"I am encouraged to see that there are two sides to this debate," Barnes added.

Copyright 2004, Southern Connecticut Newspapers, Inc.