[Virginia Fitzpatrick]

In response to a letter everyone in the Norristown Area received in May from the Pennsylvation American Water company (http://www.amwater.com/awpr1/paaw/customer_service/rates/rates_schedules/page14471.html ) proposing a 15% increase in residential water rates, local homeowner Neil Petusky addressed the following letter to the Pennsylvania Public Utility Commission:

In fairness to the customers of Pennsylvania American Water (PAW), any rate increase should be denied at this time.

Pennsylvania American Water (PAW) is a subsidiary of American Water Works (AWW) which was a publicly traded corporation until taken private by a leveraged Buy-Out (LBO) in January 2003. Last autumn I was informed by several employees of PAW that this LBO investor group is planning to take AWW public in the near future.

After taking a corporation private, an LBO typically pays itself large sums of money as fees and/or dividends, sells off assets, defers and/or cancels needed capital programs and finally sells its stock back to the corporation when going public again. This typically leaves the corporation with heavy debt and delayed needed capital programs.

PAW employees have stated that PAW had been selling assets. From my own experience of maintaining my residence for the past 36 years I can attest to significant adverse changes in water quality since PAW was taken private. As a private entity, PAW leaves me little or no access to financial information. This being the case, I look to the PUC for answers to my concerns.

Any rate increase prior to AWW going public will enhance the public offering price since gross income will be increased which would portend greater earnings for AWW. A higher public offering price means more debt will be required to buy back the LBO shares. Were a rate increase hearing to be scheduled after a public offering, it is very likely that the corporate debt would be smaller and any rate increase needed to service public debt also would be smaller.

If you want to support or protest the rate increase, send a letter to the Pennsylvania Public Utility Commission, Post Office Box 3265, Harrisburg, PA 17105-3265.
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[Virginia Fitzpatrick]

Moyer Seeks PUC Inquiry into PAWC Boil Water Advisories
Lawmaker Seeks Restitution for Constituents Effected by Boil Water Advisories


Rep. Jay Moyer (R-Montgomery) today wrote to the state Public Utility Commission to seek a formal investigation of the Pennsylvania American Water Company (PAWC) which is seeking a 15 percent rate increase at the same time it has issued three “boil water advisories" in the past month.

In a letter to PUC Chairman Wendell Holland, Moyer expressed his opposition to PAWC’s effort to obtain a 15 percent rate increase that would increase its revenue by more than $59 million. Moyer wrote that the requested increase is excessive, “particularly when one considers that PAWC has sought rate increases 10 times in the past 19 years including an 18.86 percent increase in 1999, a 10.4 percent increase in 1990 and a 10.65 percent increase in 1997.

“PAWC’s effort to impose yet another rate increase on its customers is especially troubling considering that the company has issued three ‘boil water advisories’ in my district in the past month," Moyer added. “It is simply unacceptable that PAWC would seek to increase its bottom line at the same time they are failing to provide adequate service and they are endangering the health and safety of my constituents in this way."

Moyer called on the PUC to launch a formal inquiry into the matter and to require PAWC to make restitution to the 5,400 of his constituents who were impacted by the “boil water advisories."

“This restitution should take the form of a credit on every effected customer’s next bill or a check issued by PAWC to each effected customer,” Moyer wrote. “PAWC has not been hesitant to seek rate increases from my constituents. Now, when they are failing to provide service and they are endangering public health and safety, they should be required to compensate my constituents."

Moyer also noted that residents can file their own complaint with the PUC by either phoning 1-800-782-1110 or writing to the PUC, Bureau of Consumer Services, P.O. Box 3265, Harrisburg, PA 17105-3265. Informal complaints against utilities are confidential and not available for public inspection.


For more history on the Development of the PAWC proposed interest rate increase read the blog at:

http://www.gomytown.com/bbs3/viewtopic.php?t=6950