For background, Aqua buys approximately $750,000 of CWA water per year;
Aqua then resells this water to its own customers at an enormous markup, over 300% (Source: Aqua rate case filed on Aug. 17, 2018, Pa. PUC Docket R-2018-3003558)
Aqua’s lawsuit is based on the notion that Aqua is somehow “damaged” by the 10% CWA rate increase (Source: Aqua Complaint, pages 9-11, ¶¶51-57). Aqua PA President Mark Lucca said this same thing to the press the day after Aqua filed the suit (Source: Aqua Pa. sues to block Chester Water Authority deal with Chester, Delco Times, April 4, 2018 and ‘Unholy alliance’: Aqua sues to block $60M Chester bailout as it pursues takeover of public water system, philly.com, April 4, 2019).
Even if Aqua had to absorb a 10% increase in the cost of its purchased water from CWA, Aqua’s markup is still so huge that Aqua will make a large profit off the backs of its customers reselling them CWA water (Source: Aqua rate case filed on Aug. 17, 2018, Pa. PUC Docket R-2018-3003558). But Aqua does not need to absorb the 10% CWA rate increase, and that is why Aqua’s suit is frivolous. In Aqua’s own rate case, in August 2018, Aqua anticipated a 10% CWA rate increase and “built in” this cost to Aqua’s own rate base (Testimony of E. Feeney at 7:1-9 and Schedule C-7.1 of Exhibit 1-A).
Aqua itself argued that it was in the public interest to increase Aqua’s own rate base to compensate for a 10% increase in cost to purchase CWA water (Source: Aqua Rate Case Settlement of Feb. 8, 2019, pages 23-24, ¶¶ 53-54). Nobody in Aqua’s rate case objected to these points.
On March 18, 2019, an Administrative Law Judge has recommended approval of Aqua’s new rates (Source: ALJ Decision filed on Mar. 18, 2019, Pa. PUC Docket R-2018-3003558, page 3, ¶3). Aqua’s new rates are scheduled to go into effect in May 24, 2019 (Source: ALJ Decision filed on Mar. 18, 2019, Pa. PUC Docket R-2018-3003558, page 25). Aqua thus has no damages from the CWA 10% rate increase, because Aqua itself decided months ago to fully pass this cost on to its customers. Aqua’s suit is also a disingenuous attempt to get an arbitrage profit on CWA water: Aqua is trying to freeze its own costs while increasing its own rates. If CWA’s rates are blocked from going up, Aqua gets to pocket the added revenue from its newly raised rates.
