Cape Gazette
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Residents against proposed Artesian rate hike

Homeowners: Wastewater cost-structure demands analysis
By Nick Roth | May 10, 2013
Photo by: Nick Roth Artesian sewer customers packed the Cape Henlopen High School theater May 6 to voice their concerns about a proposed rate hike in their wastewater service.

Lewes — Homeowners who tap into an Artesian Wastewater Management Inc. line for sewer service may soon see their bills increase, and they're not happy about it.

About 100 residents packed the Cape Henlopen High School theater May 6 to voice anger and disgust over the proposed rate hike, many citing fixed incomes, lower rates in other states and lack of disclosure for home buyers.

“It's unreasonable to ask people on fixed incomes to [pay more],” said Christine Bevins, president of the Trails of Beaver Creek Property Owners Association. “It's like robbing Peter to pay Paul. What are we supposed to give up? Our prescription costs? Our food? All for these high and mighty Artesian people to live a higher lifestyle than what we have worked all of our lives for?”

Nine communities in Sussex and Kent counties could see their bills rise as much as $23 per month if the Public Service Commission accepts the proposed increases. The affected communities include Stonewater Creek in Long Neck, Heron Bay in Lewes, Beaver Creek in Harbeson, Meadows at Beaver Creek in Milton, Reserves at Lewes Landing in Lewes, Shoreview Woods in Milton, Windstone in Milton and Oakwood Village in Lewes.

Artesian filed an application Jan. 18 to increase its monthly flat rate from $75 per equivalent dwelling unit to $98 per household, a 31 percent increase. The utility is seeking an increase in annual wastewater revenues of $342,608.

“I was never told about the sewer [rate],” said Windstone resident Jerry Williams, who bought his home two years ago. “I can't pay these bills and [Artesian] wants more. I think a lot of people here bought their house not knowing what they were getting involved in. If this keeps going on, I'd have to move.”

The case is in the discovery phase, and each party will have an opportunity to make arguments at the evidenciary hearings scheduled Tuesday, Aug. 6 and Wednesday, Aug. 7 in Dover. Hearing Examiner Mark Lawrence will then make a recommendation to the commission, which will have final say on the case. The PSC is currently made up of four commissioners.

David L. Valcarenghi, manager of rates and regulation at Artesian, said this is the first time the company has submitted an application with the PSC to raise its rates. In 2005, the PSC approved the flat rate of $75 per household. Four years later, he said, PSC staff performed an informal review of Artesian's operations and found the rate to be appropriate.

The application shows the company earned a rate of return of 1.41 percent for the 12-month period ending December 2011, and a return of 2.38 percent for the 12-month period ending September 2012. It projects the rate of return to drop to 0.92 percent for the period ending June 2013, which it considers inadequate. The increases will allow Artesian to achieve a rate of return of 5.16 percent. The utility operates five regional wastewater facilities, three collection systems and one independent system.

Some residents do not believe the company is in bad financial shape.

“Artesian must be challenged to demonstrate that they are efficient because the Artesian operation is a cost-plus business, and there is no incentive to be efficient,” said Martin Bloom of the Independence community, which is included in the Stonewater Creek system. “The cost structure must be challenged before any rate increase is to be considered.”

In fall 2011, Tidewater Environmental Services filed an application to raise its wastewater rates more than 90 percent. The PSC eventually approved a much lower rate increase for six area developments, while increasing rates in the town of Milton to even out what it considered a disparity.

Many residents said they were unaware of the high cost of wastewater service compared to where they previously resided.

“In the area from where we came, the cost per quarter were far less than what we are required to pay now per month,” Independence resident Nathan Wise said. “We were surprised by the very high cost of wastewater treatment when we came here. Now we see this increase, and we are in shock, astounded.”

For more information about the rate case, go to www.depsc.delaware.gov/wastewater.shtml.

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