Aqua Ohio requests system improvement charge for water customers

By Linda Dillman
Staff Writer

Aqua Ohio is asking the Public Utilities Commission of Ohio to consider a request for a 3.5 percent system improvement charge for water customers in its servicing area, including those living in the Blacklick Estates area of Madison Township.

According to company representative Jeff La Rue, the increase is equal to an additional $1.92 for a customer using 4,000 gallons of water in a month.

“I use 4,000 gallons as round number so that we can use the same talking points across multiple service areas,” said La Rue. “The actual average usage in our Blacklick Estates system during 2019 was 3,828 gallons per month.”

Although the proposed system charge would raise bills, La Rue said it is not a rate hike or rate change. It is a system improvement charge, which does not go through the same process as a rate change, which includes public hearings. A change entails a full rate case proceeding, which the company representative said has not happened since 2016.

“While system improvement charges (SICs) do change bill totals, they do not change rates and have very specific parameters,” said La Rue. “SIC’s are a way for the company to recoup investments made since the last rate case was filed.”

According to the Ohio Public Utilities Commission of Ohio, on Feb. 6, 2019, the PUCO approved a 3.66 percent system improvement charge for Aqua Ohio following a 2018 application.

Ohio law allows PUCO-regulated water and wastewater companies to establish a system improvement charge based upon capital improvements and infrastructure replacements it made since its last received PUCO authority to increase rates. The utility’s last distribution rate case was authorized in March 2017.

La Rue said when a rate case is settled, SIC charges are removed from bills and become part of any rate change.

On Oct. 23, 2019, the PUCO authorized Aqua Ohio to add a 3.733 percent surcharge to customer bills. In its application, Aqua stated it has made $18 million in infrastructure improvements and replacements since its last distribution rate case or system improvement charge case.

“Because of federal tax relief, at the beginning of 2020, customers got a 11.8 percent credit for water and 16.2 percent credit/reduction for wastewater, but both were approved before the pandemic hit,” said La Rue. “Aqua passed federal tax savings onto customers resulting from the 2017 Tax Cut and Jobs Act beginning on December bills distributed in January 2020. For years, I’ve told customers that taxation is one of the main reasons Aqua is more expensive than government-owned utilities and that if Aqua could get relief, that savings could be passed onto customers. These credits were a fulfillment of that statement.”

In response to the COVID-19 virus, Aqua Ohio ceased suspension of service for non-payment and made more flexible payment options available for those in need.

“SICs help the company by allowing them to recoup some investments without waiting for a rate case,” said La Rue. “Rates always lag behind the expenditures, unlike government owned utilities who can raise rates before making investments.

A utility company can request reimbursement for pipes, valves, treatment equipment and other infrastructure that need replacement for reliability or regulatory needs. SICs may not include cost increases for daily operations like employee healthcare, taxes, chemicals or power.

In the past, Aqua Ohio invested in the following projects: chemical storage upgrades, $91,000; 2,650 feet of water main replacement along Bonita and Greenfield, $391,000; 699 feet of water main replacement along Chatterton, $226,811; rehabilitation of supply well 4, $32,500; replacement of outdated instrumentation, measurement sensors and reporting equipment, $74,830; Harbor Boulevard wastewater lift station replacement, $305,008 and the addition of a rotary wastewater filter to expedite treatment and protect Blacklick Creek, $779,951.

“Even if the PUCO approves the 3.5 percent SIC as requested, Blacklick Estates customers using 4,000 gallons are paying Aqua $8.46 less per month than after the 2016 rate case,” La Rue said.

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