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As part of an ongoing effort by the NAWC Small Company Committee, we will be bringing you news of steps that are being taken across the country to lessen the regulatory burden on small systems.
Earlier this year, the Indiana Utility Regulatory Commission (IURC) authorized its Water/Wastewater Division to implement an Alternative Regulatory Program (ARP) for companies serving fewer than 3,000 customers. Under the ARP, eligible water and wastewater utilities can agree to have their rates adjusted annually through the application of an inflation-based cost index to qualifying expenses in return for their participation in certain mandatory and elective programs designed to enhance their financial, managerial and operational capabilities.
The ARP caps the allowable rate increases at 7.5% per year and 25% between general rate increase proceedings. As a consumer safeguard, a utility will not be permitted to increase its rates through the ARP if its achieved rate of return exceeds its most recently authorized cost of capital.
I have long been an advocate for the rate-of-return regulatory model that has served American customers so well across regulated utility industries – electricity, natural gas, and water. Despite expanded service and increasing demand, regulated utility rates have increased more or less in line with inflation (although we are now undoubtedly in a rising cost era). However, the regulatory model is set up to reward scale and is full of safeguards to prevent the utility from charging unreasonable rates. While the model works for large companies and those safeguards are necessary, many small regulated water utilities are missing out on the regulatory process either because it is too expensive or too onerous. This ultimately leads to under-investment, losses in reliability, and threats to environmental compliance.
Out of the over fifty thousand water systems in the US, about 83% serve fewer than 3,500 people, and the majority of those are privately owned and operated. NAWC serves a number of those companies and our Small Companies Committee has long recognized a need to engage more small system owners in the regulatory process.
Over the past nine months, we have been working to identify a set of regulatory best practices for small systems that will be presented to the NARUC Water Committee in July of this year, including a sample rate application and survey of current policies. Over the next few months, I will be posting stories on recent developments on small system regulatory issues, as well as explaining some of the best practices we have identified.
If you have any recommendations on states that are proactively working with small companies on the regulatory process, let us know in the comments below.
Mad Money host Jim Cramer highlighted the exceptional performance of Aqua America’s (WTR) stock year-to-date. He invited Aqua’s chairman, president & CEO of Aqua America, Nicholas DeBenedictis, to discuss growth opportunities and investment decisions in the private water sector on the May 14th edition of Mad Money. See the video here.
American Water announced it is a partner to a $1.8 million, 2-year award from the Israel-U.S. Binational Industrial Research and Development (BIRD) Foundation along with Steam Control Ltd. for the development of an advanced pressured management system.
This research project demonstrates the feasibility of installing modifications on existing pressure system controls that could reduce pressure in a system in response to reduced customer demand. International efforts to reduce leakage have confirmed that reducing excessive pressure not only reduces the volume of leaks through pipes but reduces the frequency of pipe failures. The expected outcome of the project will enable average reduction of water leakage significantly.
“Increasing operational efficiency by reducing water waste is a major priority at American Water and for many utilities around the world,” said Dr. Mark LeChevallier, Director of Innovation and Environmental Stewardship at American Water. “Leakage in public water systems is a common problem, undermining water-resource efficiency and resulting in loss of purified drinking water, wasting the energy and material resources used in abstraction and treatment. This innovation can automatically reduce water pressures under low flow and will result in less water leakage and reduced non-revenue water. We also believe this project will reduce the number of main breaks that occur.”
This is the first BIRD Foundation award for American Water and Steam Control Ltd. This project is part of the company’s Innovation Development Process. American Water used its industry-leading position to launch the Innovation Development Process in 2009 to drive innovation and support the development of new products. The program tests new ideas, both from within the company and from business partners, to create greater efficiencies in strategic areas such as water reuse, desalination, wastewater operations and bio-energy.
About BIRD Foundation
The BIRD (Binational Industrial Research and Development) Foundation works to encourage cooperation between Israeli and American companies in the various areas of technology, and provides free assistance in locating strategic partners from both countries for developing joint products.
The BIRD Foundation supports projects without receiving any rights in the participating companies or in the project itself. The financial assistance is repaid as royalties from sales. The Foundation provides support of up to 50% of a project’s budget, beginning with R&D and ending with the initial stages of sales and marketing. The Foundation shares the risk and does not demand that the investment be repaid if the project fails to reach the sales stage.
About Steam Control Ltd.
Stream Control Ltd. is an Israeli start-up company, which has developed Aqua-Guard, a patented electronic controller which integrates elements of hardware, software and hydraulics targeting a reduction of 25 percent of total water loss. The company has successfully completed a first pilot project in the city of Jerusalem and is currently launching the product in Israel, Brazil and the UK.
Aquarion Water Company has announced the purchase of the Town of Bethel’s water system, serving 3,300 customers. Adding to its previously purchased Meckauer and United Water systems in Bethel, the town will benefit from Aquarion’s expertise in developing and expanding water resources. This will also help improve critical water infrastructure to meet increasing health and environmental regulatory standards.
“We are pleased to continue our expansion in the Town of Bethel,” said Charles V. Firlotte, Aquarion President and CEO. “We are working closely with the Town of Bethel and PURA to complete the purchase, and we look forward to welcoming these new customers to the Aquarion family.”
“Aquarion has a proven track record of financial strength and excellent customer service,” said Bethel’s First Selectman Matt Knickerbocker. “I am confident that they will deliver reliable, efficient water service to our residents.”
Aquarion’s purchase must be approved by the Town of Bethel and the Connecticut Public Utility Regulatory Authority (PURA), a process which may take up to six months to complete.
In 2011 and 2012, Aquarion purchased and integrated 57 Connecticut water systems into its portfolio, strengthening the company’s ability to deliver high quality water to communities throughout the state.
Aqua Pennsylvania, Inc. (Aqua) President Steve Tagert was surprised with a “Special Recognition” Award from the Board of Directors of the Pennsylvania Chapter of the American Water Works Association (PA AWWA) at its annual meeting luncheon in Hershey, Pennsylvania.
 Aqua Pennsylvania President Steve Tagert The resolution acknowledged Tagert for his special effort, work experience and leadership, which has provided invaluable and consistent service to the water industry and the PA AWWA Section membership. The resolution also acknowledged Tagert’s earnest support of the PA AWWA Water Utility Council, on which he served from 2006 to 2012, and his “… inclusive style and ability to share his thoughts with all committee members with whom he worked by unselfishly offering his knowledge and by providing solutions to water suppliers, regulators and members of the Pennsylvania AWWA Section through his understanding and common sense approach to finding solutions for the benefit of all Water Utility Council members.”
In addition to his Water Utility Council role, Tagert has also served on the Water/Wastewater Agency Response Network (WARN) Board since 2007 and has supported the organization’s Water for People Charity and the Partnership for Safe Water, of which all of Aqua’s surface water treatment plants are a member.
“Today’s resolution demonstrates that Steve’s professionalism and experience has been as invaluable to PA AWWA as it has been to Aqua,” said Aqua America, Inc. Chairman and CEO Nicholas DeBenedictis. “I’m proud to see Steve, a true and tenured water professional, be recognized by his water industry peers for the years of service he has provided, and continues to provide, to PA AWWA.”
Tagert was named president of Aqua Pennsylvania in March 2012 and has been with the company for more than 40 years.
Artesian Resources Corporation announced that Dian C. Taylor, Chair, President and CEO, was the recipient of the 2013 Samuel S. Baxter Memorial Award from the Water Resources Association of the Delaware River Basin (WRADRB) at their Annual Recognition Dinner held April 17 in Philadelphia, Pennsylvania.
The Samuel S. Baxter Memorial Award, one of six awards presented, is given to an individual who best exemplifies the characteristics that Samuel S. Baxter exhibited in his long and successful career as a pioneer in water resource management. “I am humbled and very much appreciative of the recognition given to me. This award not only recognizes me personally, but the entire Artesian family. We are committed to ensuring that sound water management remains one of the cornerstones of our mission,” said Dian Taylor.
The award was presented to Taylor by Delaware’s Lieutenant Governor, Matt Denn, who said, “For over 100 years Artesian has contributed to the growth and vitality of our State. Under Dian’s leadership, the education of customers, the general public and school children on water conservation issues and environmental protection have been exemplary. Her community outreach serves as an example of how one person can make a major impact on so many others.”
Beginning when Dian Taylor first assumed her role at Artesian in 1991, she worked to instill throughout the company the need to encourage customers to conserve water and protect the environment. Under Taylor’s visionary leadership, Artesian has grown from serving water customers only in northern New Castle County, Delaware, to being the largest investor-owned water utility on the Delmarva Peninsula. As a result of her stewardship, Artesian now serves over 300,000 people across all three counties in Delaware and in a growing service territory in Cecil County, Maryland.
In 1992 she instituted Artesian’s Water Education Program in local schools and they have now reached nearly 20,000 children across the Delmarva Peninsula. Recognizing the importance of preserving and conserving our precious water resources, the company embarked into total water resource management in 2004 when it commenced providing wastewater treatment services with land application of the reclaimed water.
Under Taylor’s leadership, in 2010 the company instituted the Artesian Water Recycling Partnership, an initiative with the town of Middletown and involving Delaware’s Departments of Natural Resources and Environmental Control and Agriculture, which enables farmers to irrigate their fields with reclaimed water. This partnership has put to beneficial use millions of gallons of reclaimed water each day, improving crop yields.
Samuel S. Baxter was appointed the City of Philadelphia’s first Water Commissioner in 1952. As Commissioner, his first objective was to remove contaminants from the city’s drinking water which he accomplished after only one year. He went on to have a long and successful career and was known as one of the nation’s leading civil engineers.
United Water was recognized by Springfield Public Schools for providing exceptional outreach and education programs to Springfield, NJ, students. Dan Warwick, Springfield Public Schools Superintendent, presented an award to United Water for its outstanding community leadership. The company is a founding sponsor for the World is Our Classroom program, and has donated nearly $775,000 over the past 10 years.
“United Water is a terrific partner to Springfield Public Schools,” said Warwick. “I am pleased to present this award to an organization that shares the belief that the key to academic success is engaging students in a dynamic learning environment.”
Nearly 20,000 Springfield fifth grade students have gone through the World is Our Classroom program since its inception in 2003. The program, which advocates learning outside of the classroom, has developed and implemented some of the region’s most innovative classroom curricula involving active, hands-on learning experiences. Since its success in Springfield, the program has expanded regionally, such as United Water’s partnership with Killingly, CT. “We are grateful for United Water’s commitment and support over the past decade,” said Nora Burke Patton, Executive Director of World is Our Classroom. “This partnership has opened young minds to employment opportunities in science, engineering and the industry.”
United Water began a 20-year public-private partnership with the Springfield Water and Sewer Commission in 2000. Under the terms of the contract, United Water operates the 67 million gallons per day Bondi’s Island Wastewater Treatment Facility. One of the largest and most progressive wastewater facilities in New England, this facility serves about 275,000 residents in seven municipalities. United Water also operates the nearby Holyoke Wastewater Treatment Facility, which serves about 40,000 residents.
“We’re excited to be part of this initiative that helps educate our youth about our environment and the role they play in keeping our water and wastewater systems safe and clean,” said Nadine Leslie, President of United Water’s Environmental Services segment. “The Springfield Water and Sewer Commission and the World is Our Classroom’s ongoing efforts and commitment to the citizens of Springfield are to be commended. It’s an honor to share this award from the Springfield Public Schools with them today.”
Pennsylvania American Water’s Shady Lane Treatment Plant, which serves approximately 15,000 customers in Montgomery and Chester counties, has received the Directors Award from the Partnership for Safe Water, a program developed by the U.S. EPA, American Water Works Association (AWWA) and associated organizations to guide water suppliers towards improving water quality by optimizing system operations.
Pennsylvania American Water’s facility, which is located along the Schuylkill River near Spring City, earned the award for successfully completing the Self- Assessment and Peer Review phase of the Partnership program. This phase includes comprehensive evaluation of treatment plant operations and performance, identification of performance limiting factors, and the development of action plans to achieve optimization. The plant will be one of an elite group of utilities honored by the Partnership at the annual conference of the AWWA in Denver in June. AWWA is the largest and oldest worldwide organization dedicated to safe water.
“We are honored to receive this award,” said Paul Zielinski, senior director of water quality and environmental compliance for Pennsylvania American Water. “Our goal is to continuously strive to optimize operations and improve the quality of water we deliver to our customers. Our plant staff worked very hard to earn the Partnership’s Directors Award, which reflects our ongoing commitment to protecting public health.”
Zielinski noted that 32 of Pennsylvania American Water’s surface treatment plants have earned Directors Awards.
The Partnership for Safe Water is a voluntary self-assessment and optimization program for water treatment plant and distribution system operation. More than 220 utility subscribers, collectively serving more than 85 million people, are committed to the Partnership’s goals of providing safe, high-quality drinking water through achieving operational excellence in water treatment. Partnership members participate in a rigorous four-phase self-assessment and peer review process, developed by industry experts, and are recognized nationally for their commitment to delivering safe water to their communities.
The Indiana Supreme Court ruled, on April 11, that government does not have the unchecked right to determine the value of private property taken for public use, and that an Aqua America subsidiary is entitled to have the fair value of its infrastructure established by a jury.
The case involves infrastructure that served a portion of Fort Wayne and Allen County, Indiana. The City of Fort Wayne condemned the water utility in 2002 and unilaterally established a purchase price based on two appraisals that it commissioned. Aqua appealed this decision and sought to have the ability to present its view of the value of the property seized by the taking and requested that a jury decide what the fair value of the property was at the time of the City’s use of eminent domain. The Indiana Supreme Court agreed with Aqua’s positions and allowed it the ability to present its side of the story.
Aqua America Chairman and CEO Nicholas DeBenedictis said the company is considering its options and hopes to avoid returning to court. Nonetheless, the decision justifies its persistence. “Although we don’t normally sell assets,” DeBenedictis said, “when we do, we will fight to get fair value.”
Aqua America’s corporate counsel Christopher Luning said the company is pleased to have played a role in establishing case law that gives vital protection to land and property owners. “The highest court in Indiana has rendered a national victory for private property rights. It assures citizens have a voice in such a powerful use of government authority,” Luning said.
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