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AquaAqua Virginia, the company that provides water and sewer service to much of Fluvanna, filed a request Aug. 1 for a rate increase with the State Corporation Commission (SCC) that could raise customer bills by 7.4 percent.

The average household in the Lake Monticello system uses 3,200 gallons of water and sewage service per month, said Aqua Virginia President John Aulbach.

That puts the average customer bill at $118.61 per month. Once the rate changes go into effect, that bill will increase to $127.38 per month.

Aqua is permitted to charge its new rates before the SCC rules on the case. If the SCC ultimately approves a rate increase lower than Aqua’s new charges, Aqua must refund the difference plus interest to its customers.

The rate case requests that the SCC allow Aqua to begin charging its new rates “no later than 180 days after the company’s application is deemed complete.” Gretchen Toner, Aqua America spokesperson, said that the company will wait to hear from the SCC before implementing the new rates.

Aqua provides water and sewer service to nearly 5,000 homes, offices and other buildings in the Lake Monticello system. Lake Monticello, Sycamore Square, Nahor Village and Piedmont Village comprise the Lake Monticello system, which is Aqua’s largest system in the state.

Aqua also provides water to 40 locations in Columbia, 31 locations in Palmyra, and 28 locations in the Stage Coach neighborhood. Census estimates lead Aqua to believe that each connection serves three people, said Toner. So the Lake Monticello system probably serves about 15,000 people. Fluvanna’s population is 26,000.

Aqua customers pay monthly base water and sewer charges regardless of how much they use. They also pay a charge per 1,000 gallons, or kilogallon (kgal) of usage.

Aqua wants to raise its sewer base charge to $32.18 from the current $31.26, and raise its water base charge to $18.79 from $17.62. The company seeks to raise its sewage usage charge to $15.96 per kgal from $15.05, and its water usage charge to $7.92 per kgal from $6.74.

There has been and will continue to be a cap on sewage charges. Any customer usage above 6,000 gallons per month does not incur sewage costs. The cap is a nod to the fact that many customers use water to irrigate their lawns, wash their cars, and fill their pools. Water used in that way does not need to be processed as wastewater.

Statewide, the company hopes the SCC will grant increased water revenues of $1,488,998, or an 11 percent increase, and increased sewage revenues of $399,069, or a 5.4 percent increase.

“We’ve been on a fairly routine every-three-years filing for general rate increases with the SCC to recover investments that have been installed and spent for that preceding time frame,” said Aulbach as he explained why Aqua wants a rate increase. “We’re recovering those investment dollars after they’ve been spent in a prudent, efficient and reasonable manner.”

Aqua has invested approximately $3.3 million in the Lake Monticello system since 2015, and an overall $26 million since 2003 when it acquired the system, said Aulbach and Toner.

One of the improvements Aqua has made recently is to install generators “at a number of different water and wastewater pumping stations to provide uninterrupted service that would maintain water pressure and actively move wastewater through the collection system for treatment during power outages,” said Aulbach.

Aqua also made “extensive” repairs to the wastewater collection system by tightening up the manhole system so as to cut down on stormwater and groundwater infiltration. “It’s costly to provide wastewater treatment, so we only want to be treating wastewater, not water and groundwater,” he said.

While the improvements cost money, Aulbach said they saved larger expenses later on. “If we did not improve the wastewater collection system to keep out stormwater and groundwater, we would have to invest at the wastewater plant to expand its capacity, and that would be a much more costly construction project,” he said.

Odor mitigation
Aqua has also taken steps to mitigate the sewage odors that plague certain spots in and around Lake Monticello.

One pump station in particular, Glen Burnie, has had a problem with odor, said Aulbach. Aqua has added chemicals to help neutralize the smell. The company is also making use of carbon filters, which absorb odors, on the pump station vents.

“Especially at that pump station, we have undertaken a program to monitor it more frequently and identify any locations in the piping or the chemical feed tubes where air might be escaping and seal them,” said Aulbach. “We’ve received some feedback from Lake Monticello maintenance crews and from customers that our efforts are paying off. That’s a situation that we’re very aware of, and we are continuing to monitor and work toward a resolution.”

Aqua’s rate case brings back the water and wastewater infrastructure service charge (WWISC).

The monthly charge, which would be in addition to water and sewer charges and would go directly toward capital improvement projects, was rejected by the SCC on Sept. 9, 2015. The ruling, however, did not deny Aqua the ability to request the charge as part of a regular rate case. Aqua is now doing so.

“A WWISC is a proven regulatory tool that enables a utility to replace critical infrastructure, like water pipelines, on an ongoing basis and fund the projects through a modest and gradual service charge between base rate case proceedings,” according to an Aqua statement. “This service charge results in critical infrastructure being replaced more timely and efficiently.”

Aqua contends that recovering capital investments via the WWISC “would help keep down the regulatory and legal expenses incurred during rate cases – all of which customers pay in rates,” and that such a charge is used in 16 states.

The amount of the proposed charge has not yet been determined, but Aulbach said his company has requested that the WWISC be capped at 10 percent of the average statewide monthly bill.
Money collected from Fluvanna customers would fund projects in the county but also throughout the state. According to the rate case, “In order to meet the need to replace aging infrastructure and make other investments in the company’s water and wastewater systems that do not generate additional revenues, Aqua Virginia proposes the WWISC.”

Return on equity
Aqua has asked the SCC to authorize it to collect enough money from its customers to provide a 10.6 percent return on equity capital (ROE) to its investors.

“I do not believe that is a high rate to request,” said Aulbach. “The ROE directly contributes back to our future capital improvements plans by keeping that capital money flowing into Virginia.”

The ROE goes back to investors. But those who feel pleased with the amount of money they make may continue to invest in Aqua America.

“Shareholders are the ones who put up the money at the outset for us to invest in our system,” said Toner.

The SCC will set the ROE amount when it rules. The last rate case took about a year and a half to resolve. If the SCC follows the same timeline, a ruling may occur in January 2019.

Aqua explains water and wastewater service infrastructure charge (WWISC)  Aqua’s rate case, labeled PUR-2017-00082 is available for review at scc.virginia.gov.