Aqua Pennsylvania Files Rate Request Based on Water and Wastewater Operations, Infrastructure Improvements and Repairs Across the Commonwealth

Rhea-AI Summary

Aqua Pennsylvania has filed a rate adjustment request with the Pennsylvania Public Utility Commission (PUC) to recover $953 million in infrastructure investments by the end of 2025. This marks Aqua's first rate request in almost three years. The increase aims to support the replacement of around 200 miles of aging water mains, installation of new valves and service lines, and the replacement of hundreds of fire hydrants.

Aqua President Marc Lucca emphasized the need for modernizing water and wastewater infrastructure and highlighted the company's efforts to comply with new regulations and counter cyber threats. The proposed rate hike would raise the average residential water bill from $80.91 to $97.01 per month, and the wastewater bill from $81.18 to $96.10 per month.

The review process can take up to nine months, with any approved changes expected to take effect by February 2025. Aqua is also seeking grants and low-interest loans to mitigate the impact on customers and offers financial assistance options for those in need.

Positive

• Aqua Pennsylvania's commitment of $953 million in infrastructure investments by 2025.
• Replacement of approximately 200 miles of aging water mains and hundreds of fire hydrants for improved reliability and public safety.
• Efforts to comply with new regulations for PFAS removal, lead service line replacement, and counter cyber threats.
• Secured $32 million in state grants and low-interest loans, with an additional $85 million pending.
• Availability of financial assistance programs to support low-income customers.

Negative

• Proposed rate increase would raise the average residential water bill by $16.10 per month.
• Average residential wastewater bill would increase by $14.92 per month.
• Potential financial burden on customers due to the rate hike.
• Review process for rate adjustment can take up to nine months.

Insights

Financial Analyst

From a financial perspective, Aqua Pennsylvania's rate adjustment request is a clear indication of its substantial capital investments and ongoing commitment to modernize its water and wastewater infrastructure. The requested increase of $126.7 million per year seeks to recover the $953 million spent on infrastructure improvements, which is a significant amount. This will certainly impact the company's financials, potentially enhancing its long-term revenue streams but also placing a short-term financial burden on its customer base.

However, the company's proactive measures, such as securing $32 million in grants and low-interest loans, along with an additional pending request for nearly $85 million, suggest a strategic approach to minimize the impact on customers while ensuring the financial stability of Aqua Pennsylvania. These grants and loans could help offset some of the required rate increases, making the financial outlook slightly more favorable.

Overall, this rate adjustment could lead to improved service reliability and reduced environmental impact, which are critical for sustaining customer satisfaction and maintaining regulatory compliance. However, the potential for rate increases could also lead to customer dissatisfaction, which may have a short-term negative impact on the company’s public perception.

Market Research Analyst

From a market research standpoint, the rate request by Aqua Pennsylvania reflects a broader industry trend of upgrading aging infrastructure to meet modern standards and regulatory requirements. The company’s focus on replacing older pipes and addressing issues like PFAS contamination and lead service line replacement aligns with industry-wide efforts to improve water quality and reliability.

The investment in cyber-security measures also highlights a growing concern in the water utility sector about potential cyber threats, making this a significant area of focus. These investments position Aqua Pennsylvania as a proactive leader in the sector, which could enhance its market standing and attract potential investors who prioritize sustainable and secure utility practices.

However, the increased costs for customers, especially in a market sensitive to price hikes, could lead to customer churn or increased scrutiny from consumer advocacy groups. The company's efforts to secure public grants and offer financial assistance programs demonstrate a balanced approach to mitigating these concerns, but customer sentiment will be a critical factor to monitor moving forward.

Request reflects Aqua’s commitment to reliability and service for customers

BRYN MAWR, Pa.--(BUSINESS WIRE)-- Aqua Pennsylvania Inc. (Aqua) filed an application with the Pennsylvania Public Utility Commission (PUC) today requesting an adjustment in water and wastewater rates for its customers. This rate request reflects recovery of the $953 million in infrastructure investments through the end of 2025 and highlights Aqua’s commitment to improving reliability and service for its customers across the commonwealth.

“We are at a critical point when it comes to our water and wastewater infrastructure here in Pennsylvania and across the country,” said Aqua Pennsylvania President Marc Lucca. “I am proud to share that our replacement of older pipes that deliver drinking water not only improves customer service by reducing the number of water main breaks and leaks, but also decreases environmental impacts that may occur from these breaks. In addition, we are aggressively responding to new regulations requiring treatment of source water to remove PFAS and replacement of lead service lines, as well as defending against threats from cyber-attacks, which is becoming a more common occurrence throughout our industry.”

The request, Aqua’s first in almost three years, covers capital investments and system repairs that Aqua has made since April 2023 and is projected to make through the end of 2025. This includes the replacement of approximately 200 miles of aging water main, as well as associated valves and customer service lines, throughout the approximately 5,900-mile distribution system. Aqua has also replaced hundreds of fire hydrants, drastically improving public safety in the communities it serves.

“While I’m proud of the work we have done, and will continue to do, in modernizing our water and wastewater infrastructure, I also understand rate changes can be difficult for our customers,” said Lucca. “That’s why we are aggressively seeking grants and low-interest loans to moderate rate impacts. In fact, in the past few years, we have successfully secured approximately $32 million in state grants and low-interest loans and have an additional pending request for nearly $85 million to benefit our customers. We commit to continue pursuing these grants and low-interest loans.”

Aqua also offers several options for customers seeking financial assistance. “We want to help our customers with limited incomes connect with programs and resources that make utility bills more affordable,” said Director of Community Assistance Programs Rita Black. “Anyone who is concerned about being unable to pay their bill is encouraged to learn more about these programs on our website.”

Aqua’s requested base rate increase requires investigation and approval by the PUC. The rate review process can take up to nine months, which means customers can expect any approved increases to take effect at the end of February 2025.

If the company’s full request were to be approved, it would increase the residential water bill for a typical customer using 3,870 gallons per month from $80.91 to $97.01, an increase of about $16.10 per month (54 cents per day). The average monthly residential wastewater bill would increase from $81.18 to $96.10. The typical Aqua residential customer would still be able to have a day’s worth of water, approximately 129 gallons, for approximately $2.44 - or about 2 cents per gallon for quality water delivered directly to the customer’s home. This usage includes cooking, drinking, showering, washing clothes and dishes, and sanitation. Aqua is requesting an overall rate increase of $126.7 million per year for its water and wastewater operations.

The process to modify base rates is transparent and involves multiple opportunities for public participation. Customers can call Aqua at 877.987.2782 for more information about the rate request.

About Aqua Pennsylvania
Aqua Pennsylvania provides water and wastewater service to approximately 1.5 million people in 32 counties throughout the Commonwealth of Pennsylvania. Visit AquaWater.com for more information or follow @MyAquaWater on Facebook and @MyAquaWater on X.

About Essential
Essential Utilities, Inc. (NYSE:WTRG) (“Essential” or the “Company”) delivers safe, clean, reliable services that improve quality of life for individuals, families, and entire communities. With a focus on water, wastewater and natural gas, Essential is committed to sustainable growth, operational excellence, a superior customer experience, and premier employer status. We are advocates for the communities we serve and are dedicated stewards of natural lands, protecting more than 7,600 acres of forests and other habitats throughout our footprint.

Operating as the Aqua and Peoples brands, Essential serves approximately 5.5 million people across nine states. Essential is one of the most significant publicly traded water, wastewater service and natural gas providers in the U.S. Learn more at www.essential.co.

Forward-Looking Statements
This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which generally include words such as “believes,” “expects,” “intends,” “anticipates,” “estimates” and similar expressions. The Company can give no assurance that any actual or future results or events discussed in these statements will be achieved. Any forward-looking statements represent its views only as of today and should not be relied upon as representing its views as of any subsequent date. Readers are cautioned that such forward-looking statements are subject to a variety of risks and uncertainties that could cause the Company’s actual results to differ materially from the statements contained in this release. Such forward-looking statements include, but are not limited to, statements relating to the capital to be invested in Aqua’s water and wastewater infrastructure, that it will continue to seek and receive grants and low-interest loans, and that it will receive its requested rate increase. There are important factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements including the factors discussed in the Company’s Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q, which are filed with the Securities and Exchange Commission. For more information regarding risks and uncertainties associated with the Company’s business, please refer to the Company’s annual, quarterly and other SEC filings. The Company is not under any obligation - and expressly disclaims any such obligation - to update or alter its forward-looking statements whether as a result of new information, future events or otherwise.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240523953666/en/

Media:

Patrick Wenger

Aqua Communications Manager

O: 610.645.1175

PMWenger@aquawater.com

Source: Aqua Pennsylvania Inc.

FAQ

What is the proposed rate increase for Aqua Pennsylvania customers?

The proposed rate increase would raise the average residential water bill from $80.91 to $97.01 per month and the wastewater bill from $81.18 to $96.10 per month.

When will the new rates take effect if approved?

If approved, the new rates are expected to take effect by the end of February 2025.

How much is Aqua Pennsylvania investing in infrastructure?

Aqua Pennsylvania is investing $953 million in infrastructure improvements by the end of 2025.

What improvements are included in Aqua Pennsylvania's infrastructure investments?

Investments include the replacement of approximately 200 miles of aging water mains, new valves and service lines, and hundreds of fire hydrants.

How is Aqua Pennsylvania addressing environmental and safety concerns?

Aqua is complying with new regulations for PFAS removal, lead service line replacement, and countering cyber threats.

What financial assistance programs does Aqua Pennsylvania offer?

Aqua offers several options for customers seeking financial assistance, including connection to programs that make utility bills more affordable.

What is the overall rate increase Aqua Pennsylvania is requesting?

Aqua is requesting an overall rate increase of $126.7 million per year for its water and wastewater operations.

How long does the rate review process take?

The rate review process can take up to nine months.

What steps is Aqua Pennsylvania taking to mitigate the impact of rate increases on customers?

Aqua is seeking grants and low-interest loans to moderate rate impacts and offers financial assistance programs for customers with incomes.