Aqua America will be new water provider
May 05, 2012 (Menafn - Star Beacon - McClatchy-Tribune Information Services via COMTEX) --Ohio American Water customers in Ashtabula County will need to make out that water bill check to Aqua America.
OAW completed the sale of its Ohio water assets to Aqua America earlier this week, said Ed Kolodziej, president and chief operating officer of Aqua Ohio. The sale involves systems in nine Ohio counties, primarily in the northeast and central sections of the state. The purchase price was 101 million plus assumed debt of 11 million.
Aqua's Ashtabula County, Mentor and Mentor-on-the-Lake systems will be operated as the Lakeshore Division, with its headquarters in Mentor, Kolodziej said. However, he said there should be no changes to the "rank and file" staffing in Ashtabula.
On Friday Kolodziej visited the Ashtabula operations, which includes the treatment plant east of Walnut Beach. He said the upgrades and renovation work that Ohio American began at the plant will continue under Aqua. Further, Kolodziej said that Aqua began working on the distribution system in Ashtabula County several weeks ago and installed 53 valves that will help minimize the impact of disruptions in service.
"We are aggressively addressing those things," Kolodziej said. "(The local Aqua employees) are excited about the changes."
The purchase increased Aqua's customer base in Ohio by about 66 percent. Kolodziej said the larger base should allow the utility to operate more efficiently and spread its fixed costs over more customers.
Kolodziej said about 45,000 new customers in just Ashtabula and Lake counties were added to the Aqua system as a result of the purchase.
In addition to OAW's Ashtabula County customers, the sale affects the county-owned water system, which purchases bulk water for the system from Ohio American. Kolodziej said the county's contract with OAW will be honored by Aqua.
Matt Butler, Public Utili-ties Commission of Ohio spokesman said a pending Ohio American rate increase request, if granted, will be assumed by Aqua Ohio. The PUCO hearing is scheduled to begin Wednesday. The commission will rule on the request at some point after the hearing.
The request was an increase of about 21 percent, which would raise money for infrastructure improvements. When the PUCO staff issued its report in January, it recommended increases in the range of 13 to 15 percent. If the staff's recommendation were accepted, the average household bill would rise by approximately 7 a month.
Kolodziej said the utility plans to present a settlement plan to the PUCO next week that would roll back the operations and maintenance component of the rate case to 2009 levels. That doesn't mean that current water bills will be less under Aqua's ownership, but it does mean the percentage of increase requested in the most recent case will be less than what OAW presented.
While Aqua uses a monthly billing cycle in many of the other areas where it operates, it will continue to honor the every-other-month cycle OAW customers in Ashtabula County are accustomed to. He said that starting with the current billing cycle, the statements will come from Aqua.
"The last bills from Ohio American were around the 27th or 28th (of April)," he said.
In announcing the purchase, Aqua America's management pointed to the emerging natural gas boom as a reason for the company's interest in Ohio
"Shale drilling for natural gas is a very water-intensive business that can provide an economic boost well into the future if it's done right environmentally," said Aqua America Chairman and CEO Nicholas DeBenedictis.
Aqua has been on a buying spree during the past year, closing five transactions that helped it consolidate its customer base in a few states while pruning assets in areas that do not present those opportunities. In a separate agreement, Aqua America sold its New York water systems, which serve approximately 50,520 customers. The buyer was American Water's New York subsidiary. The sale of those systems marks Aqua's exit from that state.
Since May 2011, Aqua America has sold its Miss-ouri operations to American Water; purchased American Water's Texas operations and sold its Maine operations to Connecticut Water.
"(The Ohio) transaction is the latest and the largest of several acquisitions and purchases we have completed to transform the company by maximizing efficiencies and concentrating our efforts in states where we have critical mass," DeBenedictis said. "Additionally, Ohio and Texas are energy-rich states with growth opportunities for the water-energy nexus that could have a positive impact on the future of our company."
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