State May Approve 10-19% Aquarion Rate Hikes

Aquarion customers can expect to spend anywhere from 10 to 19 percent more on their water bills soon, if a recent draft decision by the Department of Public Utility Control is upheld next month.

In a preliminary ruling on the company's proposed rate hikes, the DPUC rejected Aquarion's sought-after revenue increase—which would have resulted in a nearly 20 percent leap in residential rates across the state—but approved a smaller uptick instead.

Under its plan, the DPUC estimates that a typical residential water bill in the company's Southern Division would rise from $450 to $499 per year, an 11 percent jump. Eastern Division residents—including Westport and the better part of Fairfield County—would see comparable increases.

DPUC estimates assume a 5/8" meter and 9,600 cubic feet of annual water usage.

The changes would allow Aquarion to take in $14 million more than its $135 million total in 2009, bringing its annual revenue to $149 million. That caps the company's return on equity—or profit—at 9.8 percent, substantially lower than Aquarion's requested level of 10.6 percent. 

In its draft decision, the DPUC noted that regulated utilities across the state had no higher than 9.75 percent return on equity.

"The Department believes that, over the last three years, the range of reasonableness is 9.26 percent to 10 percent, with emphasis on the lower end of the range," the DPUC wrote.

Aquarion's proposed increase received a sharply negative response at a series of DPUC public comment sessions conducted around the region earlier this year. The department also noted that every one 170 letters and emails it received on the subject expressed opposition to Aquarion's application.

"Many of those commenting noted the overall poor state of the economy and the increased financial burden that increased water rates would present for residential and business customers," the decision reads.

The company argues that the increases are necessary to offset system upgrades and declining consumption due to water-efficient devices.

"The Aquarion Water company understands as well as anyone the difficult economic environment that now exists," spokesman Bruce Silverstone said Monday. "The DPUC had a difficult decision in balancing the needs of the company against the needs of the rate-payers, and the DPUC came out with a reasonable decision."

Aquarion's last major rate increase came in 2007, when customers saw bills jump anywhere from 15 to 33 percent. The company was also granted a smaller, supplementary hike in 2008.

The decision now enters the exceptions stage, in which the company and state agencies can offer feedback to the DPUC before its final ruling.

On Monday, Attorney General Richard Blumenthal announced that he intends to ask the department to leave rates unchanged.

"This huge hike is still too high, threatening consumers and businesses struggling to stay above water," Blumenthal said in a statement. "DPUC should deny Aquarion any rate increase, compelling the company to share the struggle of their customers."

Silverstone said Aquarion also plans to register objections in the coming days.

"We believe there are certain aspects that warrant change, and we will ask the DPUC to reconsider some of these issues in the exceptions stage," Silverstone said.

DPUC spokesman Phil Dukes said the department expects to render a final decision at its commissioners' Sept. 8 meeting, but that it may schedule a special session before the Sept. 13 deadline if the text isn't finalized before the 8th.

The rate increases will enter into effect as soon as a final version is voted on, Dukes said.