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Aqua America a Corporate Profile

Aqua America a Corporate Profile

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Published by dreamwvr
As of January 2014, in the four largest of these privatized water systems, typical households were paying nearly five times as much for water service on average as they paid before Aqua took over their systems. After accounting for inflation, typical residential bills have increased by an average of 240 percent or $483 a year (see table). That is an average increase of 10 percent a year.
As of January 2014, in the four largest of these privatized water systems, typical households were paying nearly five times as much for water service on average as they paid before Aqua took over their systems. After accounting for inflation, typical residential bills have increased by an average of 240 percent or $483 a year (see table). That is an average increase of 10 percent a year.

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Published by: dreamwvr on Aug 03, 2014
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           
A
qua America is the second largest publicly traded U.S. water utility company, serving nearly 3 million people in eight states.
1
For more than 100 years, Aqua America operated almost exclusively in the suburbs of Philadelphia, where it was founded in 1886. In 1968, a holding company was formed, and in the early 1990s the company began an aggressive growth-by-acquisition strategy. In 2004, the parent corporation, still based in Bryn Mawr, Pa., changed its name from Philadelphia Suburban Corp. to Aqua America to announce its arrival on the national stage.
2
To date, the company’s operations remain concentrated in Pennsylvania, with about half of its customers and more than half of its revenues coming from the state.
3

Aqua America ocuses on buying waer sysems and hiking waer prices. I ypically purchases small waer and sewer sysems in areas near is exising nework.
4
 In addiion o owning sysems, he company operaes a handul o local governmen-owned sysems, bu i uses hose deals as a way o build is repuaion and o ge a oo in he door on a pos-sible acquisiion o he sysems.
5
 Afer aking over and building ou is sysems, he company seeks o increase waer raes.
6
 The abiliy o hike consumer bills is he key o is earnings.
7
 On op o regular rae increas-es, he company pursues sae approval o implemen disri-buion sysem improvemen charges o increase revenue and speed up reurns.
8
 This surcharge, which CEO Nicholas DeBenedicis hrough his poliical connecions was insrumenal in irs esablishing in Pennsylvania, allows he company o increase cusomer bills wihou ull public scruiny.
9
 Six saes where Aqua America operaes allow his surcharge,
10
 and he company is exploring how o ge he charge auhorized in is oher wo saes: Texas and Virginia.
11
 The company plans or mos o is invesmens o be recoverable hrough he surcharges.
12
 In 2010, afer nearly wo decades o rapid expansion hrough acquisiions, Aqua America began pruning is operaions o win-now ou sae operaions wih lower earnings poenial, including where regulaors orbade cerain increases o raes.
13
 Since hen, he company has cu is sae presence by more han 40 percen, exiing six saes o ocus on is remaining eigh.
14
 
    
 AQUA AMERICA:
 A Corporate Profile
 
2
Aqua America coninues o expand in he energy-rich saes o Pennsylvania, Ohio and Texas, and he company acively seeks o sell waer o he oil and gas indusry.
15
 In 2011, i enered ino a major join venure pipeline projec o rans-por millions o gallons o waer rom he Susquehanna River o hydraulic racuring (racking) sies in Pennsylvania.
16
 “Pennsylvania is booming wih gas drilling,” DeBenedicis old
Bloomberg News
in Ocober 2013. “And we’re he larges sup-plier or he gas indusry or waer.”
17
Aqua America’s join venure, however, has proved less proi-able han expeced. In 2013, a year afer he company eviced low-income amilies rom heir mobile home communiy o build he pumping saion or he pipeline,
18
 i booked a ne loss on he projec, ciing a slowdown in drilling.
19
 

Afer rapid growh in he lae 1990s and early 2000s, Aqua America has seemingly lalined, wih lackluser expansions and srong public resisance o is rae hike plans. For ex-ample, public opposiion has apparenly scared he company ou o New York and Florida, where i sold is operaions in he ace o municipalizaion effors and srong public scruiny o is raes and service.
20
 Organized communiies have a real chance o win local public conrol o heir waer resources and o purchase heir sysems rom he company.
     
In 2013, afer a dynamic campaign by FLOW Florida, Aqua America pulled ou o he sae o Florida, selling is sysems o he Florida Governmenal Uiliy Auhoriy and oher eniies. Aqua Uiliies Florida, a subsidiary o Aqua America, had been he larges privae waer uiliy in Florida,
25
 serving drink-ing waer o abou 60,000 people saewide in 2012.
26
 Many cusomers were deeply dissaisied wih he company and re-pored chronic waer qualiy and cusomer service problems,
27
 and hese cusomers paid some o he highes waer raes in he sae.
28
 
          
For a ypical household wihin a couny, using 5,000 gallons a monh, Aqua Uiliies charged 105 percen more han comparable publicly owned uiliies, which adds up o an exra $255 a year.
29
      
From 2007 o 2011, he company violaed drinking waer qualiy regulaions 76 imes and wasewaer regulaions 39 imes.
30
 Many o he company’s cusomers complained ha he company’s waer was smelly, discolored, conaminaed and undrinkable.
31
 
      
From 2007 o 2011, he sae Public Service Commission received 767 cusomer complains abou Aqua Uiliies.
32
 In 2011, he company was responsible or more han 40 percen o all waer and sewer complains iled wih he commission, and i received seven imes more complains han he regulaed waer uiliy wih he nex highes number.
33
 Because o hese major issues, a coaliion o communiy groups rom 19 counies came ogeher and ormed FLOW Florida in early 2010. They encouraged residens o conac heir eleced officials and atend sae regulaory hearings o speak ou agains he company’s rae increases and services.
34
 The communiy organizing paid off. In early 2012, in response o his consiuens’ ongoing problems wih Aqua Uiliies, sae senaor Alan Hays (R-Umailla) in-roduced a bill, in his words, “o sop uiliy companies and he Public Service Commission rom ripping off consumers.
35
 In he inal minues o he sae’s 2012 legislaive session, he legisla-ure unanimously passed an amended version o he bill ha creaed a sudy commitee on invesor-owned waer uiliies. I was he irs sep oward changing sae laws o bes proec consumers rom poor-perorming and high-cos privae waer uiliies.
36
 Around his ime, in February 2012, he sae Public Service Commission cu he company’s auhorized reurn on equiy because o is “marginal” service qualiy.
37
“Try to remember that the shareholder is the boss. If you are doing something that
      
a year-to-year basis, you shouldn’t do it  just to get bigger. You really have to come to the bottom line.”
        

Key Financial Figures (2013)
 Aqua America

Bryn Mawr, Pennsylvania

Nicholas DeBenedicis Toal Compensaion: $3.2 million
22
 

$769 million
23

 $221 million
24
 
3
In Sepember 2012, afer years o wha i considered inad-equae proi in he sae,
38
 Aqua America announced is plans o exi Florida, offering o sell is operaions o he Florida Governmenal Uiliy Auhoriy.
39
 By he end o 2013, i had inalized he sale o every one o is waer and sewer sysems in he sae.
40
 
     
In response o concerns o is residens, he ciy o For Wayne, Ind., has aced o ake public conrol o Aqua Indi-ana’s waer sysems in and around he ciy. Aqua Indiana, a subsidiary o Aqua America, owned sysems in he norhern and souhwes par o For Wayne. For Wayne ook over he operaion o he norhern waer and sewer sysem rom Aqua Indiana in 2008,
41
 afer winning a lenghy batle over he ciy’s righ o condemn ha wen all he way o he sae supreme cour.
42
 The ranser received huge suppor across norhern F. Wayne, where poor service had plagued Aqua Indiana’s cusomers. Those cusomers were graeul o receive less-expensive, higher-qualiy ciy waer.
43
 “I drink more ap waer han I used o,” Linda Henrie o he Eagle Lake neighborhood old he
 Journal Gazete
in 2009. “I ases beter.
44
I ook more han ive years, however, o inalize a purchase agreemen because he company also sued over he purchase price.
45
Aqua America’s DeBenedicis has admited ha he company generally is “looking a every penny on he way ou o he door” when i sells asses.
46
Because o he uncerainy over he price o he norhern sys-em, he ciy delayed pursuing a purchase o he company’s oher waer sysem serving he souhwesern par o he ciy, even as hose residens clamored or public service.
47
 “I’s jus paheic,” residen Jeanine Rech said when describing Aqua Indiana’s cusomer service o he
 Journal Gazete
in 2010. “The service is nonexisen, and he waer qualiy is air o poor.”
48
 A drough during he summer o 2012 served as a game changer. Aqua Indiana was unable o mee he waer needs o more han a housand o is cusomers, orcing i o connec o he ciy’s waer sysem. This precipiaed alks beween he ciy and he company abou ranserring he souhwesern sysem o ciy ownership.
49
In July 2013, For Wayne and Aqua Indiana announced ha hey had reached a deal o resolve all ousanding dispues. The ciy agreed o pay a oal o $67 million or he norhern waer and sewer sysem and he souhwesern waer sysem. The company will reain he souhwesern wasewaer sysem or a leas he nex ive years.
50
SOURCE:
 Aqua America. U.S. Securities and Exchange Commission. Form 10-K. March 3, 2014 at 4 to 5.
  
Headquarters: Bryn Mawr, PA

ActiveNoneExited

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