The arguments over an Aqua Virginia rate increase and imposition of a new water and wastewater infrastructure service charge (WWISC) on its customers across Virginia— including about 2,300 customers in Botetourt— closed earlier this month.
The full State Corporation Commission (SCC) will now consider the recommendations made by the appointed hearing examiner (SCC judge) and responses to those recommendations by the water company, individuals customers and by several county boards of supervisors and home owners associations where Aqua operates, along with concerns raised by the Office of the Attorney General and the SCC’s own staff.
The SCC is expected to issue a decision shortly.
It’s pretty certain Aqua Virginia’s application for a water rate increase filed in the summer of 2017 will be turned down and refunds will go to customers who have been paying the increased rate since the private utility and customers opposed to the increase reached an agreement to keep rates as they were after federal corporate taxes were reduced earlier this year.
The change in the corporate tax rates offset the requested $1.4 million in additional revenue that Aqua Virginia was seeking from its customers.
What remained in contention is Aqua’s request to impose a new WWISC fee on customers that would be used for capital improvements— water line and sewer line replacements and work to correct infiltration and inflow (I&I) problems in some of the systems it owns.
The SCC hearing examiner, who held a public hearing at Lord Botetourt High School in May, recommended Aqua be allowed to implement the new WWSIC fees across the board, but for a trial three-year period.
He noted in his recommendation that a recent court decision allowed private utilities to impose the fees as a way of improving infrastructure, and argued that allowing the WWSIC would accelerate repairs and improvements to the company’s water systems.
But the SCC staff, Virginia’s Attorney General’s office, the Botetourt County Board of Supervisors and other counties and homeowners associations affected by the proposed new fee argued otherwise.
Botetourt County attorney Michael Lockaby noted in his response to Hearing Examiner D. Mathias Roussy Jr. ‘s recommendations that were made in August that WWISC fees should only be charged to customers of systems where work was being done and not across the Aqua’s entire customer base.
In his response to Roussy’s recommendation, Lockaby argued that allowing the fee to be applied on all customers essentially established a tax on those customers where work was not being done and only the General Assembly could tax citizens, while the SCC is only allowed to approve fees.
He said a Virginia Supreme Court case—Elizabeth River Crossings OpCo v. Meeks “distinguished between taxes and fees by asking three questions: (1) Is there a particularized benefit to the person paying the charge? (2) Does the payer have reasonable alternatives to paying the charge? And (3) is there a reasonable correlation between the charge and the benefit received? A negative answer to questions (1) or (3) means that the charge is a tax, not a fee. The WWISC, as recommended, forces a ‘no’ answer on both.”
The Virginia Attorney General’s Consumer Counsel Katherine C. Creef also said in her response to the hearing examiner’s recommendations that she “does not support approval of a WWISC under the specific facts and circumstances of this case.” She acknowledged, though, that the consumer safeguards included in the Hearing Examiner’s recommendation would improve the proposed WWISC, if one is approved by the SCC in this case.
Aqua Virginia attorneys also recommended the SCC adopt the hearing examiner’s report and authorize the company to implement the WWISC with the three-year trial period.
However, in its response to the hearing examiner’s recommendtions, the SCC staff opposes approving the WWISC in this instance. “While the Hearing Examiner’s recommendation of a WWISC, limited to certain projects and capital expenditures,
addressed Staffs concern that the projects comprising the WWISC were ill defined, two of Staff’s concerns remain: (1) Aqua Virginia has provided no reliable gauge of what the WWISC will cost ratepayers; and (2) Aqua Virginia has not demonstrated it intends to track the WWISC transparently,” the staff response says. “Aqua Virginia has requested a WWISC in this case and must thus meet its evidentiary burden for the WWISC in this case. The record does not support WWISC approval.”
