Aqua America: A Corporate Profile
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Published by Food and Water Watch
Aqua America is the second largest publicly traded U.S. water utility company,serving nearly three million people in eight states.
Aqua America is the second largest publicly traded U.S. water utility company,serving nearly three million people in eight states.
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qua America is the second largest publicly traded U.S. water utility company, serving nearly 3 million people in eight states.
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For more than 100 years, Aqua America operated almost exclusively in the suburbs of Philadelphia, where it was founded in 1886. In 1968, a holding company was formed, and in the early 1990s the company began an aggressive growth-by-acquisition strategy. In 2004, the parent corporation, still based in Bryn Mawr, Pa., changed its name from Philadelphia Suburban Corp. to Aqua America to announce its arrival on the national stage.
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To date, the company’s operations remain concentrated in Pennsylvania, with about half of its customers and more than half of its revenues coming from the state.
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Aqua America ocuses on buying waer sysems and hiking waer prices. I ypically purchases small waer and sewer sysems in areas near is exising nework.
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In addiion o owning sysems, he company operaes a handul o local governmen-owned sysems, bu i uses hose deals as a way o build is repuaion and o ge a oo in he door on a pos-sible acquisiion o he sysems.
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Afer aking over and building ou is sysems, he company seeks o increase waer raes.
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The abiliy o hike consumer bills is he key o is earnings.
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On op o regular rae increas-es, he company pursues sae approval o implemen disri-buion sysem improvemen charges o increase revenue and speed up reurns.
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This surcharge, which CEO Nicholas DeBenedicis hrough his poliical connecions was insrumenal in irs esablishing in Pennsylvania, allows he company o increase cusomer bills wihou ull public scruiny.
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Six saes where Aqua America operaes allow his surcharge,
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and he company is exploring how o ge he charge auhorized in is oher wo saes: Texas and Virginia.
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The company plans or mos o is invesmens o be recoverable hrough he surcharges.
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In 2010, afer nearly wo decades o rapid expansion hrough acquisiions, Aqua America began pruning is operaions o win-now ou sae operaions wih lower earnings poenial, including where regulaors orbade cerain increases o raes.
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Since hen, he company has cu is sae presence by more han 40 percen, exiing six saes o ocus on is remaining eigh.
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AQUA AMERICA:
A Corporate Profile
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Aqua America coninues o expand in he energy-rich saes o Pennsylvania, Ohio and Texas, and he company acively seeks o sell waer o he oil and gas indusry.
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In 2011, i enered ino a major join venure pipeline projec o rans-por millions o gallons o waer rom he Susquehanna River o hydraulic racuring (racking) sies in Pennsylvania.
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“Pennsylvania is booming wih gas drilling,” DeBenedicis old
Bloomberg News
in Ocober 2013. “And we’re he larges sup-plier or he gas indusry or waer.”
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Aqua America’s join venure, however, has proved less proi-able han expeced. In 2013, a year afer he company eviced low-income amilies rom heir mobile home communiy o build he pumping saion or he pipeline,
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i booked a ne loss on he projec, ciing a slowdown in drilling.
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Afer rapid growh in he lae 1990s and early 2000s, Aqua America has seemingly lalined, wih lackluser expansions and srong public resisance o is rae hike plans. For ex-ample, public opposiion has apparenly scared he company ou o New York and Florida, where i sold is operaions in he ace o municipalizaion effors and srong public scruiny o is raes and service.
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Organized communiies have a real chance o win local public conrol o heir waer resources and o purchase heir sysems rom he company.
In 2013, afer a dynamic campaign by FLOW Florida, Aqua America pulled ou o he sae o Florida, selling is sysems o he Florida Governmenal Uiliy Auhoriy and oher eniies. Aqua Uiliies Florida, a subsidiary o Aqua America, had been he larges privae waer uiliy in Florida,
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serving drink-ing waer o abou 60,000 people saewide in 2012.
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Many cusomers were deeply dissaisied wih he company and re-pored chronic waer qualiy and cusomer service problems,
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and hese cusomers paid some o he highes waer raes in he sae.
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For a ypical household wihin a couny, using 5,000 gallons a monh, Aqua Uiliies charged 105 percen more han comparable publicly owned uiliies, which adds up o an exra $255 a year.
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From 2007 o 2011, he company violaed drinking waer qualiy regulaions 76 imes and wasewaer regulaions 39 imes.
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Many o he company’s cusomers complained ha he company’s waer was smelly, discolored, conaminaed and undrinkable.
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From 2007 o 2011, he sae Public Service Commission received 767 cusomer complains abou Aqua Uiliies.
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In 2011, he company was responsible or more han 40 percen o all waer and sewer complains iled wih he commission, and i received seven imes more complains han he regulaed waer uiliy wih he nex highes number.
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Because o hese major issues, a coaliion o communiy groups rom 19 counies came ogeher and ormed FLOW Florida in early 2010. They encouraged residens o conac heir eleced officials and atend sae regulaory hearings o speak ou agains he company’s rae increases and services.
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The communiy organizing paid off. In early 2012, in response o his consiuens’ ongoing problems wih Aqua Uiliies, sae senaor Alan Hays (R-Umailla) in-roduced a bill, in his words, “o sop uiliy companies and he Public Service Commission rom ripping off consumers.”
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In he inal minues o he sae’s 2012 legislaive session, he legisla-ure unanimously passed an amended version o he bill ha creaed a sudy commitee on invesor-owned waer uiliies. I was he irs sep oward changing sae laws o bes proec consumers rom poor-perorming and high-cos privae waer uiliies.
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Around his ime, in February 2012, he sae Public Service Commission cu he company’s auhorized reurn on equiy because o is “marginal” service qualiy.
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“Try to remember that the shareholder is the boss. If you are doing something that
a year-to-year basis, you shouldn’t do it just to get bigger. You really have to come to the bottom line.”
—
Key Financial Figures (2013)
Aqua America
Bryn Mawr, Pennsylvania
Nicholas DeBenedicis Toal Compensaion: $3.2 million
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$769 million
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$221 million
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In Sepember 2012, afer years o wha i considered inad-equae proi in he sae,
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Aqua America announced is plans o exi Florida, offering o sell is operaions o he Florida Governmenal Uiliy Auhoriy.
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By he end o 2013, i had inalized he sale o every one o is waer and sewer sysems in he sae.
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In response o concerns o is residens, he ciy o For Wayne, Ind., has aced o ake public conrol o Aqua Indi-ana’s waer sysems in and around he ciy. Aqua Indiana, a subsidiary o Aqua America, owned sysems in he norhern and souhwes par o For Wayne. For Wayne ook over he operaion o he norhern waer and sewer sysem rom Aqua Indiana in 2008,
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afer winning a lenghy batle over he ciy’s righ o condemn ha wen all he way o he sae supreme cour.
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The ranser received huge suppor across norhern F. Wayne, where poor service had plagued Aqua Indiana’s cusomers. Those cusomers were graeul o receive less-expensive, higher-qualiy ciy waer.
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“I drink more ap waer han I used o,” Linda Henrie o he Eagle Lake neighborhood old he
Journal Gazete
in 2009. “I ases beter.”
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I ook more han ive years, however, o inalize a purchase agreemen because he company also sued over he purchase price.
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Aqua America’s DeBenedicis has admited ha he company generally is “looking a every penny on he way ou o he door” when i sells asses.
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Because o he uncerainy over he price o he norhern sys-em, he ciy delayed pursuing a purchase o he company’s oher waer sysem serving he souhwesern par o he ciy, even as hose residens clamored or public service.
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“I’s jus paheic,” residen Jeanine Rech said when describing Aqua Indiana’s cusomer service o he
Journal Gazete
in 2010. “The service is nonexisen, and he waer qualiy is air o poor.”
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A drough during he summer o 2012 served as a game changer. Aqua Indiana was unable o mee he waer needs o more han a housand o is cusomers, orcing i o connec o he ciy’s waer sysem. This precipiaed alks beween he ciy and he company abou ranserring he souhwesern sysem o ciy ownership.
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In July 2013, For Wayne and Aqua Indiana announced ha hey had reached a deal o resolve all ousanding dispues. The ciy agreed o pay a oal o $67 million or he norhern waer and sewer sysem and he souhwesern waer sysem. The company will reain he souhwesern wasewaer sysem or a leas he nex ive years.
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SOURCE:
Aqua America. U.S. Securities and Exchange Commission. Form 10-K. March 3, 2014 at 4 to 5.
Headquarters: Bryn Mawr, PA
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