Aqua says MABS sale ‘will not have immediate impact on rates,’ but 45% hike possible later
Quarterly billing would be eliminated by Bryn Mawr company
SHENANDOAH – While Aqua Pennsylvania says MABS customers won’t see an immediate increase in rates, an up to 45% increase is possible, according to documents filed with the Pennsylvania Public Utilities Commission.
FULL COVERAGE
- PUC ‘conditionally accepts for filing’ Aqua application to purchase MABS
- State Consumer Advocate files protest in MABS acquisition case
- Borough to keep wind farm land, breached dams in MABS sale; will receive cell tower revenue for 10 years
- Aqua plans to join MABS system with existing Roaring Creek system
Additionally, quarterly billing will be eliminated when the sale closes, Aqua says.
“The acquisition will not have any immediate impact on the rates of either existing customers of Aqua or MABS customers,” Aqua said in their application for regulatory approval to acquire Shenandoah’s water authority. “The hypothetical impact on rates is outweighed by the recognized benefits of Aqua’s ownership including its expertise and ability to raise capital; the furtherance of consolidation/regionalization of water services; and the spreading of costs over a larger customer base.”
The borough signed the agreement with Aqua, of Bryn Mawr, one of the largest private water companies in the nation, last year to sell the municipal authority for $12 Million.
MABS serves about 2,900 customers in the borough, West Mahanoy Township, and parts of Butler Township and Girardville.
Through its Roaring Creek Division, Aqua provides water service to Girardville, Mount Carmel, Aristes, and Shamokin with reservoirs and a water treatment plant near Elysburg. Statewide, Aqua serves about 448,000 customers across 32 counties.
William C. Packer, Regional Controller for Aqua Pennsylvania and Aqua New Jersey, told the Public Utilities Commission that Aqua plans to charge the same base rates as MABS at the time of closing, and will also apply its rules, regulations, and fees.
Packer said, while rates would not immediately increase, customers could see a nearly 45% hike down the road.
“The average bill [could] increase to approximately $62.96 per month or a 44.87% increase,” Packer told the PUC, noting that the current average monthly bill for residential MABS customers is about $43.46 per month.
Aqua, Packer says, is expecting revenues of $1.9 Million from MABS, with expenses of $1.2 Million for operation and maintenance, $345,715 for depreciation, and $94,687 for taxes, leading to about $284,172 in operating income. $710,100 in capital investments are expected in the first year of ownership, Packer says.
Including revenues from the company’s rate base and rate of return, Aqua says it has an operating income deficiency of $610,638 from what it says it needs.
If the entirety of that cost is placed on MABS customers, rates will be hiked by the 44.87% figure Packer noted.
A proposed notice to MABS customers filed with the PUC lists two scenarios for rate increases: a 15.90% if 80% of the deficiency is subsidized by existing Aqua customers, and the 44.87% increase if none of it is subsidized.
If 100% of the deficiency were borne by Aqua customers, Shenandoah rates would only increase by 0.10%, or $0.08 for the average MABS customer.
Packer claims in testimony to the PUC that “The positive factors from the Proposed Transaction, however, outweigh the possibility of increased rates.”
Read Aqua’s Application Here
Read Packer’s Testimony Here
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