State regulators slashed a rate request by Aqua North Carolina, the state's biggest private water utility with 88,000 water and sewer customers, including more than 400 subdivisions in Wake County.
The N.C. Utilities Commission approved a 5.3 percent increase for Aqua, representing an additional $2.3 million a year in sales for the company. The rate increase approved is a fraction of the 19 percent the company had originally asked for.
The rate increase will be the company's second in three years, and the request in January elicited hundreds of objections from customers who said they couldn't afford higher utility bills in the middle of a severe economic downturn.
The Public Staff, the state's consumer protection agency in utility rate cases, conducted a months-long audit of Aqua's books and concluded that the company was entitled to a puny rate increase of 1.2 percent.
The utilities commission decision, issue late Monday, essentially splits the difference between Aqua's position and the Public Staff's. Aqua had scaled back its 19 percent request to about 10 percent last month when company officials realized they had aroused intense passions from customers and skepticism from regulators.
Aqua charges about $100 for typical monthly household usage, about twice as much as customers pay for water services in Raleigh, Charlotte and other municipal water/sewer agencies.
One reason Aqua charges more is because it operates more than 1,300 individual water/sewer systems, typically serving outlying suburbs and rural areas that are not connected to municipal water systems. Some of the water systems serve only a handful of customers.
Another reason for the higher rates is because Aqua, whose parent company is based in Pennsylvania, is known for its aggressive policy of spending on system upgrades and coming in for rate increase requests year after year.
Aqua America, the parent company, is the nation's second largest private water utility. One Wall Street analyst characterizes private water utility companies like Aqua as "rate case machines."
The approved rate increase was effective immediately.
The increase is spread out over five Aqua subsidiaries, which have different rates.
In Wake County, for example, the Aqua Water residential rate increased 8.2 percent and the Aqua Sewer household rate went up 2.6 percent.
Aqua also has customers in the Wilmington area, in and around Charlotte, in Fayetteville, among other regions. The comapny has service in parts of 48 counties.