Introduction My name is Bill Ferguson. I am one of the co-founders of this website. This part of the website is about my personal experience filing two formal complaints with the Public Utility Commission (PUC) against Aqua Pennsylvania. Summary This has been a long and difficult journey. It started with the belief that the first priority of a Public Utility Commission (PUC) should be to protect customers from monopoly company misbehavior resulting in excessive rates and undeserved company profit. My faith in that belief has been substantially diminished. Filing Formal Complaints with the PUC is a lengthy, challenging and intricate legal process. I have learned a lot, but not much that is encouraging. On 9/18/2023 I filed two formal complaints with the Public Utility Commission (PUC) regarding Aqua Pennsylvania’s 2021 rate case. Both alleged that Aqua used incorrect data to set tariff rates for New Garden Township customers. They asked the PUC to investigate and, if appropriate, require Aqua to refund all overcharges to New Garden customers. One complaint is about the volume data Aqua used to set rates for New Garden sewer customers. The whole principle of this complaint is that you cannot set fair and just rates using volume data that substantially understates actual use and does not reflect actual use patterns. The other complaint is about charging those same New Garden customers for a $1.2 million/yr trucking expense that ceased to be incurred while Aqua still had the obligation to remove it from the rate case. I am editing this line on October 25, 2026. Over three years have gone by since filing the trucking complaint and it is still not resolved. Details follow on both complaints. Complaint #1 - Consumption Volumes The first complaint involved two aspects of the customer consumption volumes Aqua used to calculate the increased billing rates for New Garden customers: First, Aqua forecast a consumption volume of 104 million gallons/year. That is substantially less than the 125 million gallons New Garden reported during the last year they owned the system. That difference could substantially impact rates paid by customers. Second, Aqua’s forecast consumption volumes in three different rate bands that bore no relationship to actual use by customers. How is it possible to set fair and just rates using data that does not reflect actual consumption? Here is an in-depth summary of this complaint: LINK Complaint #2 - Wastewater Trucking Aqua inherited an expensive wastewater trucking operation when it purchased New Garden’s sewer operation. About nine months after acquiring the New Garden system Aqua filed for a rate increase and included that $1.2 million/yr trucking cost for the full period of the forecast. Substantial evidence indicates that Aqua was activating an unused pipeline to eliminate the trucking and trucking stopped well before the rate increase was finalized. That evidence includes: A statement by Aqua's Operation Manager that the trucking ended 8 - 10 months after Aqua acquired the system. He concluded that statement by saying it was complete in the first year of operation. The President of Aqua PA sent New Garden customers a letter that included a statement that trucking ended after "several months". Aqua's 2021 annual report to the PUC included an item stating that its New Garden Dry Line Activation project was complete by 12/31/2021. If trucking did stop before the PUC closed the record for Aqua's 2021 rate case, then Aqua had a legal obligation to remove that cost – but did not. Consequently, New Garden customers paid a total of $3.3 million for that non-existent cost. Here is an in-depth summary of the trucking complaint: LINK Step By Step Complaint Experience False Start - There was a false start for my complaint filings. The first filing was on June 8, 2023. The PUC incorrectly told me it should have been filed as a “Formal Rate Complaint”. The net result was a delay of about three months. The full story is told here: Complaints Filed - Finally on 9/18/2023 the complaints are correctly filed and accepted by the PUC. Aqua Replies (three weeks after filing) - Aqua files formal replies that essentially denied everything and put forth reasons why the complaints should be thrown out. The word “denied” appeared 69 times. See this LINK for a detailed discussion. Hearing Scheduled (>1 month since filing) - On 11/3/2023 the PUC issues an order scheduling a hearing on 12/12/2023 for my complaints: LINK . Mediation (~2 months since filing) – Aqua proposes mediation for my complaints and I agree. After two sessions I decide that mediation is going nowhere and withdraw from the process. This has consumed about eight months. Here is a bit more detail: Hearing Re-scheduled (~9 months since filing) – After the mediation was cancelled, it takes the PUC about a month and a half to schedule my hearing for July 23, 2024: LINK . Aqua’s Consolidation Motion (~10 months since filing) – On 7/11/2024 Aqua files a motion to consolidate my two complaints with the rate case they filed during May-2024. The PUC immediately cancelled the scheduled hearing. I file an objection to Aqua's motion. Here are the full details: PUC Action (~13 months since filing) – It takes the PUC another three months, but on 10/21/2024 Aqua’s consolidation motion is denied and the complaint hearing is now scheduled for 11/25/2024: LINK . Aqua Files Another Motion (~14 months since filing) – Just 10 days before the scheduled hearing Aqua files a motion to convert the hearing to a pre-hearing conference call or to delay the hearing by another 30 days: LINK . I promptly file a reply asking the PUC to deny Aqua’s motion: LINK Five days before the hearing, the PUC denies Aqua’s motion: LINK The hearing will proceed. The 11/25/2024 Hearing (~14 months since filing) – This was a major event. It lasted about five hours. What follows are brief highlights. And, here is a page with extensive detail: LINK . There were four main participants: The Administrative Law Judge (ALJ) running the hearing, Aqua’s lawyer, Aqua’s Manager of Rates and myself. The ALJ starts by laying out the meeting procedures and expectations. I spent considerable time laying out both complaints in detail. Aqua objected 16 times during my presentations. When I finished, the ALJ asked me a couple of questions and then turned it over to Aqua’s lawyer to cross examine me. I feel that a large part of Aqua’s intent was discredit me and my testimony. Then it was Aqua’s turn to testify. Aqua’s Manager of Rates was offered as an “expert witness”. She explained how Aqua had owned the New Garden system for only a short time and used the best available data. I then had the opportunity to cross examine Aqua’s witness. I asked a number of questions but feel that all I got was non answers. The next order of business was admitting evidence into the official record. The last order of business was closing statements. I went first and was brief. I stated that I had clearly made my case and requested the PUC to take appropriate action to investigate whether or not Aqua had fulfilled its responsibilities. Aqua’s key points were that I did not meet my burden of proof and retroactive ratemaking is prohibited. He ended with emphatic demands that the complaints be thrown out. The “Initial Decision” (~18 months since filing) – On 3/31/2025 the ALJ issued her “Initial Decision”. It essentially ratified everything Aqua presented and totally rejected my complaints. To me, it reads as if it had been written by Aqua. It accepted a number of statements Aqua’s witness made as fact without any consideration of the evidence I presented to the contrary. Here is a link with more detail: LINK Subsequent Filings (~20 months since filing) – On 4/21/2025 I file “Exceptions” alleging that the ALJ erred in several ways. This asks the Commissioners, reconsider the “Initial Decision” on the basis that I DID carry my burden of proof, Pennsylvania law provides for customer relief after a rate case is complete and the integrity of PUC rate making being at stake. During May-2025 there are a flurry of filings. I file a motion and petition. Aqua replies to all the filings refuting everything. Here is more detail on these filings: LINK It is now in the hands of the PUC Commissioners to make a decision. “Opinion And Order” (~21 months since filing) – On June 18, 2025 the Commissioners issue their decision. It is a total affirmation of the “Initial Decision”. The PUC has totally rejected my complaints. At this point the case is closed unless I file an appeal with the Pennsylvania Commonwealth Court within 30 days. Here is more detail: LINK Appeal Filing (~22 months since filing) – On July 17, 2025 my pro bono lawyer files notice of an appeal on my behalf. The appeal asks the court to remand the trucking complaint to the PUC to be considered on its merits. The basis for the appeal is similar to the issues noted in the “Exceptions” filing. Subsequent filings for this appeal include: November 10, 2025 - My brief is filed with the court. January 29, 2026 The PUC and Aqua file their counter briefs. April 27, 2026 we file our reply brief. May 21, 2026 the court issues a "per curiam" order indicating the case will be decided on the briefs without oral arguments. As it stands as of this writing, a decision could come this fall. Here is more detail: LINK Other Related Stuff An overview of the PUC complaint process: My reflections on filing as a utility customer without a lawyer: Epilogue – a parable illustrating my view of how the PUC adjudicates complaints: Detailed Events/Time Line For My Complaints The next section is a detailed chronological listing of all the events for my complaint filings. Probably not something to read or study carefully. However, a quick scan can illustrate the complexity and how time can drag on. September 2022 – New Garden residents get their first sewer bills reflecting the full rate increase. That prompts me to analyze Aqua’s rate filing documents, which led to my consumption volume complaint. November 21, 2022 – New Garden holds a Board of Supervisors public meeting to explain the rate increases. Aqua reveals it ended trucking by the end of 2021: LINK . That initiated my trucking complaint. June 6, 2023 - I filed a “Formal” complaint combining the two issues. June 8, 2023 – The PUC rejects my filing because it should have been filed as a “Formal Rate Complaint". June 8, 2023 – I refile as a “Formal Rate Complaint". The only difference is minor changes in the PUC forms that act as transmittal sheets for the complaint. The PUC accepts the filing. June 22, 2023 – The PUC notifies me that the filing should have been rejected. It was correct as first filed. The full story on this issue is a bit involved and is told here: June 30, 2023 – Aqua files an answer to my complaint. LINK July 10, 2023 – I file a request to withdraw the complaint, with the right to re-file. September 18, 2023 – I re-file. This time I break the two issues into separate “Formal Complaints” The PUC accepts both. Complaint summaries can be found here: LINK1 & LINK2 October 10, 2023 - Aqua filed an Answer and a “New Matter” for each complaint. Here is a summary of their replies: LINK October 25, 2023 - I filed replies to Aqua’s filings. This LINK also includes my replies October 27, 2023 - The PUC issues a hearing notice for 12/12/2023: LINK November 3, 2023 - PUC issued an order with details for the hearing on 12/12/2023: LINK November 7, 2023 - I file my trucking complaint documents for the 12/12/2023 hearing. November 10, 2023 - I file my documents for the compliance complaint. November 15, 2023 – Aqua files a motion for mediation. I accept. LINK November 21, 2023 - The PUC issues an order for mediation and consolidating the two complaints: LINK November 22, 2023 - The PUC cancels the hearing scheduled for 12/12/2023: LINK December 8, 2023 – The PUC schedules a mediation meeting for January 23, 2024: LINK February 1, 2024 – The PUC schedules a second mediation meeting for March 7, 2024: LINK April, 29, 2024 – I withdraw from the mediation process. June 12, 2024 – The PUC schedules a hearing for July 23, 2024: LINK July 11, 2024 – Aqua files a motion to combine my two complaints with the rate case that Aqua filed on May 23, 2024. LINK July 12, 2024 – The PUC cancels the hearing scheduled for July 23, 2024: LINK July 25, 2024 – I file an answer to Aqua’s motion to consolidate requesting the PUC to deny the motion. LINK October 21, 2024 – The PUC denies Aqua’s consolidation motion and schedules a hearing on the complaints for November 25, 2024. LINK October 24, 2024 - The PUC issues a pre-hearing order: LINK November 15, 2024 – Aqua files a motion to convert the November 25, 2024 hearing into a prehearing conference call or delay the hearing 30 days: LINK November 18, 2024 – I file a reply requesting the PUC deny Aqua’s motion: LINK November 20, 2024 – The PUC denies Aqua’s motion: LINK November 25, 2024 – The hearing is held. It lasts about five hours. LINK December 19, 2024 - The PUC posts the exhibit docket for the case: LINK March 31, 2025 – The ALJ issues her Initial Decision totally rejecting my complaints. LINK March 31, 2025 - The PUC secretary issues an "options" letter: LINK April 21, 2025 – I file “Exceptions” to the Initial Decision alleging that the ALJ made several legal errors in her decision. LINK May 1, 2025 – Aqua files a reply to my Exceptions. LINK May 9, 2025 – I submit two filings. The first is a motion to strike major parts of Aqua’s Exception Replies: LINK The second is a petition to reopen discovery for the complaints. LINK May 19, 2025 – Aqua files a response to the petition to reopen discovery. LINK May 29, 2025 – Aqua files a response to the motion to strike parts of their Exception Replies. LINK June 18, 2025 – The PUC issues its Order and Opinion for the complaints. It essentially totally affirmed the Initial Decision. LINK July 17, 2025 – My pro bono lawyer files an appeal with the Pennsylvania Commonwealth Court. LINK August 18, 2025 – This is the last day interested parties can file to be intervenors. Only Aqua signed up. August 29, 2025 – The PUC certified the list of documents relevant to the case. August 29, 2025 – The Commonwealth Court issued a briefing schedule for the case. September 18, 2025 - My attorney files for a 30 day extension for filing brief. September 22, 2025 - The Commonwealth Court grants the extension for filing briefs. November 10, 2025 – Our brief for the case was filed with the Commonwealth Court: ~November 25, 2025 - Both the PUC and Aqua file for a 45 day extension for filing their briefs that had been due 12/10/2025. December 1, 2025 - The court grants the request for the filing extension. December 10, 2025 – The briefs for the PUC and Aqua are due to be filed with the Commonwealth Court. January 29, 2026 - Both the PUC and Aqua file their briefs for the case. February 10, 2026 - We file a request with the court for allowance to exceed the normal word limit for a reply brief. February 10, 2026 - The court issues a schedule for replies to the word limit request. February 27, 2026 - Both Aqua and the PUC object to the word limit request. April 14, 2026 - The court denies the word limit request. April 27, 2026 - We file our reply brief with the court. It is now up to the court to either decide the case based on the briefs or schedule oral arguments. It could be a month or two before we know whether oral arguments will be needed. May 21, 2026 - The court issues a short "per curiam" order stating that the case will be decided based on the briefs that have been filed. There is a short window where participants can raise objections.

Opposing Water and Wastewater Privatization Opposing water and wastewater privatization is difficult. Local politics in Pennsylvania favor the Big Water companies when they decide to target a municipal utility. The deck is stacked against the ratepayer . Big Water always enters with the upper hand. Privatization Players The evidence suggests that most sales of municipal utilities begin with a call from a for-profit utility to municipal officials suggesting that a sale would be beneficial. There are three important players who should have some say in the sale, the selling utility, the buying utility, and the ratepayer, who will end up paying the bill. However, the rate payer is left out of the process . This leaves it up to the local officials to do what is best for their constituents. But local officials are not always aware of all the issues. Most local officials are well meaning citizens who got involved because they wanted to make a difference on local issues. But they are not paid commensurate with their responsibilities. They need to balance their lives, which requires focus on their job and their family, leaving little time to delve deeply. It is apparent to us that Big Water knows this. They know the local officials will listen to their side of the story, and with the offer of a large amount of money, local officials will not take the time to challenge what they are told. This leaves it up to the ratepayer to mount any challenge. But the ratepayer is left out of the process until the very last stage when the deal is essentially done. There are cases where the sale of municipal utility makes sense. A small struggling utility in a financially struggling community could see a benefit from a sale. But if you have read The Big Water Playbook , you know that Big Water is targeting well run utilities that are not in financial trouble. In these cases, a fair evaluation of cost/benefit shows that the cost far outweighs any benefit. The PA Commonwealth Court recently took this position in the sale of the East Whiteland sewer system to Aqua PA. Our data show that a fair evaluation of cost/benefit of a municipal utility sale will show that the cost outweighs any benefit. This should be the main focus of any opposition. Follow Local Issues Few residents follow issues in their local community. Most local issues are mundane and uninteresting, and town meetings are poorly attende d. As a result, important decisions are often made with little or no public input. With regularly scheduled public meetings, the local government can claim an open process and disclaim responsibility after the fact. Add this to Big Water’s tactics of purposely leaving the ratepayer uninformed, and you start at a big disadvantage. Unfortunately, most residents are caught off guard when they learn their municipality is selling a utility. What Should You Do Be aware Attend municipality meetings even if the sale is not on the agenda Or, at least read agendas and minutes. Watch for early warning signs. If local officials are talking about failing infrastructure, increasing regulatory requirements and they have more important things to worry about, you can bet that they have been approached by a private utility. Then when they say they are “considering a sale”, their minds have been made up. Get educated Understand the playing field in Penn sylvania Understand the Big Water takeover playbo ok Identify resources Find someone in your community with a strong financial background. This is critical. Big Water does not want you to understand the real costs of a sale. They will present the “advantages” of the deal with vague arguments and vague financial information. The largest disadvantage, the financial burden on the ratepayer, is downplayed, if even discussed. You need to understand the details, and talk intelligently about them. Opposition to a sale requires a clear quantitative understanding of all the facts, pro and con. This requires work, time, and tenacity. Understand issues specific to your community Local officials usually claim expensive repairs or upgrades are needed. Demand a detailed, independent accounting of all repairs. Local officials will put a price tag on these repairs. Again, demand a detailed, independent accounting of all costs, including payment options. They will claim by selling, the buyer can perform the repairs cheaper. Follow this link to debunk this claim. Demand to know how rates will rise after a sale. They will claim they cannot accurately predict rates because rates are set by the PUC. Rates are determined by the amount of their investment (purchase price). They can tell you what future rates will be. Only the timing may be questionable. Follow this (future link) for more information. Organize and Act A lone voice will not be heard. L ocal officials need to know there is broad opposition. Attend all municipal meetings, even if the sale is not on the agenda, and listen for the warning signs. Ask for detailed updates at each meeting. Be heard. Ask questions and demand answers, especially when discussing potential rate increases. They will claim they can’t predict rate increases because they are set by the PUC. This is an evasive maneuver. Demand access to all information. Demand a referendum on the sale. If the sale is as beneficial as claimed, there should be no hesitation to make the case and hold a referendum. Contact your state repres entatives. Tell them you oppose the sale and tell them to support ratepayer protection legislation . Testify at PUC hearings. Any utility sale will include public input hearings. Testify with facts and figures. Don’t just say the sale will raise your rates and you can’t afford it. They don’t care about that. Point out the negative impact on the economy and demand a quantitative analysis of the sale to determine public good. We Are Here To Help We've compiled helpful information obtained from our experience as well as that of others. Contact us for help. When you know the issues and the facts you can mount an opposition campaign. It is time and effort well spent. Once a sale goes through you will be stuck with inflated costs for many years to come. All of this requires being well informed. Private utilities and local officials like to talk in generalities. Because they cannot justify a sale on financial terms. Build a financial case and demand answers.

Join Our Mailing List Most Pennsylvania legislators do not consider water and wastewater privatization an important issue. Harrisburg is overrun with Big Water lobbyists, and too many legislators continue to accept campaign contributions from Big Water. We cannot outspend Big Water, but we can remind our legislators and the governor that they need our votes more than they need Big Water money. We had a successful letter writing campaign in March concerning proposed Public Utility Commission rule changes, with almost 100 residents signing on to a letter to the PUC. More opportunities will arise, and we need to make our voices heard. Join our mailing list so we can directly contact you with important information and requests for action. We will not share your information with anyone. Join our mailing list Email First name Last name Join Mailing List Thanks for joining!

Summary of PA American's November-2025 Proposed Rate Increase We now have the final PUC action on this case and American has filed its resulting tariffs. A summary of the result can be found here: Updated 08/11/2026 Summary of PAWC's 2025 rate case 11-Aug-2026.pdf Update On Aqua's May 23, 2024 Filing For A Rate Increase Aqua filed a rate increase request for its water and wastewater customers in Pennsylvania on May 23,2024. This is less than three years after its last rate request. We can expect rate requests from Aqua at this regular interval. We now have the final PUC action on this case and Aqua has filed its final tariffs. A summary of the result can be found here: (LINK ) Read More Updated 03/02/2025 CWA And The Chester City Bankruptcy The State of Pennsylvania wants to use Chester Water Authority (CWA) to bail Chester City out of bankruptcy. This is the culmination of nearly 30 years of financial problems for the city. This would put most of the financial burden on CWA customers outside of Chester City. One of the Co-Founders of this website has written an open letter to Governor Shapiro about this. Click on the "Read More" link below to read the letter. Posted 09/19/2024 8:15 PM Read More Water Wars In Pennsylvania This non-profit organization has recently published a study on privatization in Pennsylvania. It is very good. Check it out. There is also a link to a webinar on the same subject. Posted 08/21/2024 10:02 AM Updated 09/19/2024 Read More Scams, big bills and bargains: Why Pa.’s public water officials won’t stop talking Facing the rising prospect of privatization, the remaining public water officials in Philadelphia’s suburbs take pride in holding out and keeping water bills low. Posted 07/15/2024 10:02 AM Read entire story by Kenny Cooper, WHYY News Read More Posted 05/08/2024 10:03 AM Learn About the Real Impact of Privatization More Perfect Union, an advocacy journalism organization, has been following the developments in the fight against water and wastewater privatization in Pennsylvania. One of their goals is to tell the stories of working Americans fighting for policy change and corporate accountability. Follow this link to a recent story featuring Chester Water Authority and New Garden Township. https://youtu.be/277QrCqi9GU?si=X-14cEmm2I1EDANJ Posted 02/18/2024 3:16 PM Chester Water Authority Status In the past two years residents of New Garden Township have seen their sewer bills increase by over 85% and their property taxes increase by 61%, with a second comparable tax increase expected next year. In addition, our water supplier Chester Water Authority is the target of a hostile takeover attempt by Aqua PA. If this sale goes through, our water rates will double. Read More Posted 01/30/2024 5:38 PM PA Democratic Senate Policy Committee Holds Public Meeting On January 22, 2024, State Senator Katie Muth (D-Chester/Montgomery/Berks), chair of the Pennsylvania Senate Democratic Policy Committee, hosted a public hearing focused on water privatization and the unintended consequences of Act 12 of 2016. Read More

Who Pays Big Water's Interest Costs? Short answer: The ratepayer definitely is paying Should the ratepayer be paying? Not sure, there are some reasons for doubt. We need some help here - please read on. Reason #1 For Doubt There is a 1972 Pennsylvania Supreme Court decision called "York". We have seen it referenced in a number of filings related to acquisition cases. The text of the decision can be found here (LINK ). The case addresses issues with the merger of telephone utilities. Two sections of that opinion are relevant. The first is page 1, paragraph 6 which states: About midway through the opinion there is a footnote that states: Those two statements appear to be very cut and dried that ratepayers do not pay for interest costs. Reason #2 For Doubt Big Water's rate case filings contain Profit and Loss (P&L) type statements with an unusual structure: Interest is shown as an after tax cost. A P&L statement for a "traditional" business would show interest cost as a pre-tax expense. The following table compares the two (the numbers are made up for the illustration): Both formats include the same five cost items: Operating Expenses Depreciation Misc Expenses Interest Income Taxes For the PA Utility Format, interest is the last thing deducted from "Operating Income (after tax) ". That makes it appears that it is an "after tax" or a "below the line" expense. Several observations about the two formats: No matter what order you subtract the same five costs from Operating revenue, you get the same bottom line net income. PA utilities subtract the first three costs to arrive at what they call "Operating Income Before Tax ". It is a subtotal they have created for their type of P&L statement. Next, they subtract Income Taxes and arrive at another new subtotal called "Operating Income (after tax) ". There is an important caveat here: Income taxes are NOT calculated based on their "Operating Income Before Tax ". Rather, they subtract Interest from "Operating Income Before Tax " and then calculate taxes. Guess what: (Operating Income Before Tax) - (Interest) = Pre-Tax Income Therefore, the tax calculation is the same in either format. So, a couple of lines have been moved around and two new subtotals created. The substance has not changed. But, interest now appears to be an after tax cost - or in the language of the York decision "Below the line ". WHY? Is it related to the "York" opinion???? The Ratepayer Pays Every Dime Of Interest Cost For most businesses, Net Earnings is what is left over when all the cost items are deducted from revenue. In the real world, Net Earnings could be either a profit or a loss. The world of regulated utilities is different. In Pennsylvania, the amount of "Operating Income (after tax) " is first calculated and then all the other costs except interest are added to that to determine the amount of revenue the utility is allowed to collect from its customers. The utility is essentially guaranteed a profit. The critical feature here is that the calculated "Operating Income (after tax) " includes the full interest cost of the utility. The algebra is a bit involved, but is fully developed here: The bottom line is: Isn't that "interesting"! "Operating Income (after tax) " is simply the sum of Interest Cost plus Net Earnings. Once this number is determined by the above calculation, all the other cost elements get added to it to determine allowable revenue. The result is that the ratepayer winds up paying the full interest cost of the utility. Is It Legal? That is a question we really wish we had an answer to. Here are some general observations: We figured this out as a result of a 2021 sewer rate case. It is likely that it has been going on a long time. The "York" decision is over 50 years old. Is there more legal history to the case? Probably, but we do not know how to find it. Going back to the first part of the "York" court decision: Clearly, interest costs impact the rates paid by customers. The "operating income (after tax) " the utility is permitted to collect directly includes the interest costs. Is there "wiggle room" because Interest Cost is "below the line"? That term generally means an after tax cost. Interest is definitely not an after tax cost. And, the utility companies deduct it from income when calculating taxes. "Operating Income (after tax) " is not a commonly used term in business finance. Could it be an artificial construct to "work around" the "York" decision? The second part of the "York" decision leads us to believe it is indeed a "work around". It states (referring to interest cost): "While such charges must be paid by the company, they are to be paid out of the return allowed the company for the use of its property and capital devoted to the public service. " Could "Operating Income (after tax) " be interpreted to be the "return allowed the company"? That is very likely what the utility companies and regulators would claim. The fact that it specifically includes just Net Earnings and Interest Cost looks suspicious to us. If it is nothing more than a "work around", we think that stinks to high heaven. If the "York" decision was applied so that interest cost was really "below the line", then the rate setting process would set the ROE and calculate the Net Earnings before interest cost. Then whatever interest cost was incurred would reduce Net Earnings. That is definitely not happening today. As the page on profitability shows (LINK ), the Big Water companies seem to earning outsized profits in Pennsylvania. Interest costs being truly "below the line" would go a long ways to equalize Pennsylvania with other states. Bottom line: Is it legal? We are suspicious, but do not know. Can You Help Us? Interest is a major cost for utility customers. The "York" decision raises the issue of whether or not it should be a part of rate setting. Subsequent to the "York" decision there should be some legal history for the "Operating Income" (after tax) "work around". However, we do not have a clue at how to begin to track that down. Any help that readers might provide would be very much appreciated. Big bucks are involved. Just the two largest water and sewer utilities in PA (Aqua and American) are collecting $175 million/year for interest costs. They serve about 1.2 million customers in a state that has over 5 million households. That makes them small potatoes compared to the electric and gas utilities. The electric utilities serve everyone. If the "Operating Income" (after tax) "work around" does not have a legal basis, there is potentially a multi-billion dollar class action lawsuit that should be brought against the utility companies and PA's regulator.

The Economics of For‑Profit Versus Non‑Profit If you have browsed very much of this website, you know that water or sewer service by a for‑profit utility is more expensive. A key reason is that the financial management of a for‑profit utility is very different than for a non‑profit utility. This section is going to compare the two options in some depth. This page focuses on Aqua Pennsylvania because that is the operation we have the most experience with. The same will apply to PA American, they are like two peas in a pod. Other states likely do pretty much the same things, but we do not have direct experience with them. The following charts illustrate the key differences. This is not an apples to apples comparison, but read on and we will fix that. For-Profit Versus Non-Profit A somewhat unfair comparison The chart on the right shows the two major cost elements that would disappear if Aqua existed as a non‑profit. It is obviously quite a stark contrast. Profit and depreciation are a whopping amount of money that a non‑profit municipal system does not collect from its customers. The basic difference is that the for-profit utility operates on a full cost profit/loss basis. However, a municipal non-profit essentially operates on a cash basis. The difference is mostly in profit and depreciation. What about that element of unfairness? If Aqua operated as a non‑profit, three changes would be needed: #1 - It is likely that operating cost would be lower. Aqua has major expenses dealing with the Public Utility Commission (PUC) that a non‑profit would not have. #2 - Debt Service is different than interest expense and likely will be higher. #3 - There will be a need for capital investments over and above that provided by Debt Service. Any operation as large as Aqua’s will have significant on going capital construction costs. Applying the above changes results in the following: IF Aqua Was A Non-Profit IF...IF...IF What this shows is that ratepayers would save over $340 million/yr – 55% of their current bills. The assumptions behind this comparison are important: #1 - Even though operating cost should be lower for the non‑profit, they are set equal in this example. We really do not have a basis for estimating what the difference might be. #2 - Both companies have the same capital structure: 54% equity and 46% debt. #3 - A municipal non‑profit can finance their debt about 1% lower than a for‑profit. This is because muni-bonds are income tax exempt. Since Aqua’s interest cost was 4%/yr in their rate case, 3%/yr was used for the non‑profit. #4 - Capital spending for the non‑profit is set at 5% of rate base – just under $210 million/yr. We believe this is a generous allowance. Aqua’s capital spending as reported in their annual reports to the PUC has averaged $150 million/yr over the last five years. #5 - The capital spending for the non‑profit is funded by the annual turnover of debt (about 5%/yr or $96 million/yr) and issuing new debt for the balance (about $113 million). This new debt means that Debt Service will gradually increase over time – about 2%/yr of revenue. The bottom line result would be a big savings for customers. Conclusions The business management of a for-profit utility is very different than a municipal non-profit. It is not hard to see why municipal utility service will almost always be the low cost option. It is also easy to see why Big Water wants to gobble up municipal systems - it is a sure fire way to grow profits. Related Subjects #1 - Depreciation - As shown above, depreciation is a major cost for Big Water customers, but not for municipal ones. For many people depreciation is not easy to understand. Here is a page that tries to address these issues: #2 - Interest - This is a major expense for Big Water. It goes with the capital intensive nature of the business. At least in Pennsylvania, utility companies report interest costs a bit strangely. It shows up on their reporting as an after-tax cost. It is not. The issue is whether it is part of a three card monte game (see note below) being played in setting rates. We would like help from knowledgeable people on this issue. Click here for more information: (LINK ) Note: Not sure what three card monte is? Click here for a three minute fun and interesting video about this age old con game (LINK ).

After The Rate Cap Does the proposed sale of your water or sewer system to Big Water include some form of a rate freeze or rate cap? If so, read on. There are some important questions you need to be asking. New Garden Experience In August of 2016 New Garden Township signed a contract to sell its sewer system to Aqua Pennsylvania (Aqua). A key provision was a ten year cap on sewer rate increases. That was positioned as a very good deal for rate payers. But what happens in year eleven? That was never talked about. After all, eleven years from now is like forever: far, far away. Big mistake. Here is an estimate of what would have happened in year eleven: Year eleven = one big OUCH. A major case of RATE SHOCK! What You Need To Know It is not likely that future deals will include any ten year rate caps in Pennsylvania. The industry regulator made it economically unattractive. In fact, the New Garden rate cap was scuttled before the deal was completed. As a result, rates for a 4,000 gallons/month user went up 90% in May 2022. Based on rates before the acquisition, the increase was 106%. And, based on the original contractual rate guarantee, it was a 147% increase. However, most deals have some form of a limited rate freeze. Generally it is a one or two year freeze. This is pitched as a good deal for ratepayers. Actually, it reflects the Big Water buyer's schedule for general rate increases. These seem to happen every two or three years and are a big regulatory deal. It is in Big Water's best interest to wait and lump the acquisition in its next general increase rather than file for a separate increase. The key fact you should be informed about is how much will your bill go up assuming current ratepayers pay for the full cost of the acquisition. Do not let Big Water or your local officials pass this off with deflections about a rate freeze or other vague responses. It is not difficult to make a very good estimate the revenue increase the buyer will collect if the acquisition is completed (future LINK). Assume you are going to pay it all. It probably will not happen all at once, but somebody is going to pay - see Beggar Thy Neighbor (LINK) . Others may initially pay some of your increase, but you will pay for the increase of other acquisitions in the future. What goes around comes around. There is no free lunch. Question Question Question Your Local Officials.

Water - A Universal Need Water is a necessary and valuable natural resource. Everyone needs access to water on a daily basis. Most of us never give a thought to having plentiful running water. We turn the faucet on and there it is. And, what about the used water? You wash your hands, flush the toilet or run the washing machine and the used water just goes down the drain and disappears. We usually take it for granted. It is highly beneficial to health to have good quality water. Things would be wonderful if supply and disposal were as simple opening the faucet and letting used water run down the drain. Providing for clean water at an affordable cost is one of our basic responsibilities. The Pennsylvania constitution was even amended in 1971 to acknowledge this issue: “The people have a right to clean air, pure water, and to the preservation of the natural, scenic, historic and esthetic values of the environment. Pennsylvania's public natural resources are the common property of all the people, including generations yet to come. As trustee of these resources, the Commonwealth shall conserve and maintain them for the benefit of all the people.” Supply And Disposal Options At the most basic level there are two options: INDIVIDUAL or COLLECTIVE systems. Out in the country, individual wells and septic tank systems are the usual option. In a city collective systems are mandatory. The technology for providing quality drinking water and wastewater disposal is well known. It is literally being practiced by thousands of collective organizations and millions of individual wells and septic systems. There is a large body of government codes and regulations intended to ensure quality water. Especially for collective systems, there are rigorous standards that have to be met. Collective Systems Collective systems can range from two neighbors sharing a water or sewer system to systems serving millions of customers. This website focuses on the following: #1 - Municipal water or sewer systems run by your local government or a semi independent “Authority” set up by your local government. Nationally, these not-for-profit public utilities dominate water and wastewater service. #2 - A company seeking to make a profit by offering water or sewer service. Such companies can be publicly or privately owned. Nationwide, two of the largest investor owned for profit water and sewer utilities are American Water (LINK ) and Essential Utilities (LINK ) - (the parent of several Aqua state utilities. Like Aqua Pennsylvania in our state). You will find these two companies referred to frequently on this site. We often refer to them as “Big Water”. There is also a third category of mostly smaller systems. Typically, this would be the utility run by a neighborhood homeowners association. It might range in size from a handful of homes to several hundred homes. As these systems age, maintenance is often neglected and repairs can become expensive. This website can provide useful information if your system is considering being taken over by a larger system to deal with system problems. Collective Systems Are Monopolies Water and sewer utilities are natural monopolies because of the large investments required to provide these services. It is economically impossible to install multiple systems of pipes and treatment plants needed to offer competing services. So, you have one and only one option for water or sewer service. Ownership of this infrastructure naturally leads to a monopoly position. Profiteering can be a major issue for any monopoly. They have a long history of ripping off their customers – just because they can. For water and sewer utilities this is managed in two basic ways: #1 - Municipal systems or their Authorities are non-profit. They generally collect enough revenue from ratepayers to cover the cost of operating the system. No profits get distributed to anyone. Ratepayers have the ability to address issues via their elected officials. If the issues warrant, those elected officials can be voted out of office. #2 - For-profit utilities need to provide their shareholders profits and profit growth. This is the major difference between public and private utilities. Recognizing the potential for monopolistic abuse, states have created Public Utility Commissions (PUC) to regulate private utilities. In theory, a utility commission functions to protect ratepayers from monopolistic price gouging. Big Water’s Growth Strategy The large for-profit companies are always looking to grow their profits. There are two basic ways they can grow profits: #1 - They can increase their investment. The state PUC’s regulate profits based on return on investment. So, the more they invest, the greater their profits. This encourages them to build and maintain first class facilities. But, there are definite limits to earnings growth via this route. #2- Attract new customers. This is not a business where many new customers come to you asking to tap into your system. Some new customers may be added from residential or commercial development within their service area. Although welcome, it is generally not a large growth opportunity. The Big Water companies have adopted a hybrid growth strategy. They are seeking to buy existing municipal water and sewer systems. This allows them to both make large investments and gain large numbers of new customers. Both American and Essential have publicly stated that municipal acquisition is a major growth strategy. Here is a more in-depth look at the growth strategy of both companies (LINK ) Fair Market Value Fair Market Value (FMV) legislation has dramatically changed what Big Water can acquire and at what price. Before FMV came along, if Big Water wanted to buy a municipal system it had to be “distressed” (i.e. having significant operating issues) and the price was limited to depreciated value. With FMV legislation, Big Water can now buy healthy systems at an “appraised value”, as determined by professional appraisals. In practice, FMV is usually 2X – 3X the depreciated value, at least in Pennsylvania. You may be surprised that Big Water is delighted to be paying these increased prices. Their profit is determined by their investment. So, the more they pay, the greater their profits. This is a very unusual situation where both the seller and buyer want the highest price possible. FMV has also had a big impact on municipalities. The increased valuations have proven to be a huge temptation for elected officials. This is aided and abetted by Big Water touting that it is "free money". Here is a five chart summary of our view of FMV (LINK ). FMV Impact On Ratepayers The ratepayer is not particularly happy about FMV pricing. The decision to sell is seldom in the best interest of the ratepayer. That "free money" is not "free" and it is the ratepayer who bears the cost burden. Once an acquisition is complete, our experience in Pennsylvania is that water or sewer bills can double when Big Water files it next rate case with the PUC. The same water comes out of the faucet. The toilet flushes just the same. But, your bill is shockingly higher. Big Water and the PUC often claim that the initial rate increases are the result of the previous owner under investing so much that it was "falling apart". It is implied that they are "catch up" increases. At best, we think that is totally disingenuous. The first rate increase represents paying for Big Water's profits on the purchase price of the acquisition. And, if the purchase price was double or triple depreciated value, the rate increase will reflect that. The first rate increase will have little to nothing to do with improvements made to the system. If the system really does require improvements, those costs (and Big Water's profits that go along with any added investment) will be fully reflected in future rate increases. If the system really was "falling apart", those future increases can be substantial. And, there have been some acquisitions with tens of millions of dollars of followup improvements. Big Water profits play a huge role in rate setting. Here is a profile of the Big Water companies and their profitability in Pennsylvania (LINK ). Also, here is a comparison of the cost structure of a for-profit Big Water company versus a non-profit municipal system (LINK ) Big Water’s Growth In Pennsylvania Pennsylvania has become a prime target of investor-owned utilities due to the passage of privatization friendly legislation over the past 10 years (LINK ). The Big Water companies initially targeted small municipal utilities but have changed tactics and are now also targeting large regional public utilities. The combination of enabling legislation, regulatory green lighting, and an aggressive growth strategy by Big Water companies has led to a feeding frenzy in Pennsylvania. In the last seven years they have spent over $1.0 billion to acquire 20 public utilities. With another $1.1 billion worth of acquisition deals proposed or in progress. The result of these sales consistently means much higher rates. And, when the acquired system was "healthy", there is little to no improvement in service. The Purpose Of This Website Our New Garden Township sewer system was sold to Aqua Pennsylvania in 2020. Since then our rates have more than doubled for no improvement in service. We have dug into the activities that led to the sale and feel that some very questionable actions were used to push the sale through. Subsequently, we have seen many of the same things happen to others. We want anyone and everyone who might be involved in such a transaction aware of the shenanigans that can go on. These are situations where your local officials are likely to take actions that are not in your best interest. You need to be informed and act early on your own behalf. Hopefully, this website will provide you awareness and tools to do that.

The Initial Decision An “Initial Decision” is the recommended “verdict” of the case by the Administrative Law Judge (ALJ). If there are no subsequent filings for the case, that usually becomes the final decision of the PUC. If one of the parties files a protest or objection in what they call “Exceptions” then the case goes before the Commissioners for a decision. The ALJ issued her Initial Decision on March 31, 2025. It can be found here: LINK . The short summary is that it totally rejected my complaints. Initial Decision Highlights It starts with five pages of case review. If you are not familiar with the case, it provides good background. It is mostly chronological factual stuff. Next there is a list of “Facts” in the case. I break it down to essentially three parts: Truly factual stuff. Naming the parties to the case and the data Aqua filed for its 2021 rate increase. Mundane things, but clearly factual. Then there are a large number of what I call Aqua talking points. They are factual, however, I believe they should be irrelevant to the case. They are issues Aqua stressed to set the case up for dismissal on the issue of “retroactive ratemaking/single issue ratemaking”. Things like: The rate case was fully litigated. No party challenged the trucking cost. Aqua’s tariff filling underwent a review process. I was charged for my sewer service according to the approved tariffs. Finally, there are three items I find totally inappropriate as “Findings Of Fact”. They were statements made by Aqua’s witness, but never supported by evidence. And, I believe, were thoroughly refuted by the evidence I submitted. But, as “Findings Of Fact” they foreshadowed the dismissal of my complaints. They were: “At the time of the initial filing on August 20, 2021, the Company was aware that it was incurring a large “Purchased Wastewater” expense for hauling wastewater …” Aqua never provided any evidence or testimony about when the trucking stopped. The evidence I produced left open the probability that the trucking actually stopped before the rate case was filed. “At the time of the initial filing, the Company was actively searching for a solution to hauling wastewater between facilities, but no solution had been found yet.” The evidence solidly supports that promptly after closing the New Garden sewer acquisition Aqua moved to activate the pipeline. That was not “searching for a solution”. “The Company’s initial filing reflected its belief that the trucking expense would continue to occur until the end of the FPFTY.” Aqua’s statement to this effect does not make it a fact. “Discussion” is the next part of the “Initial Decision”. It goes on for eight pages. Key parts include: The “Burden Of Proof” was on my back. That was well understood going in. A very interesting statement about the trucking complaint: “Mr. Ferguson argued that he is not attempting to evade the effect of Aqua’s existing tariff provisions but to show that Aqua did not meet its obligation to provide factual and correct data for its New Garden sewer operation in its 2021 Rate Case.” At least the ALJ heard that a pivotal issue was Aqua not fulfilling its obligations. The ALJ did cite key points I made for both complaints. However, citing them and giving them weight appears to be two separate issues. Concluding the part of the discussion about my complaints, the ALJ noted that I “admitted” I participated in the public hearings for Aqua’s 2021 rate case – which I did. And, I further “admitted” that Aqua had charged me according to the resulting tariff. That might have been relevant if Aqua had pursued the issue of “Collateral Estoppel” it raised in its complaint replies. As it was, the ALJ dismissed the issue of “Collateral Estoppel” during the hearing. I do not understand why this became part of the “Initial Decision”. The next phase of the “Discussion” focused on Aqua’s testimony: In regard to the consumption volumes “the Company used the best information available to it at the time of filing” The rate case was fully litigated and nobody challenged the issues in my complaints. The “Recommended Decision” for Aqua’s rate case addressed the issues I raised at the public hearings. However, not noted was the fact that the “Recommended Decision” in no way addressed the complaint issues. The issues raised at the public hearings was excessive profitability for a zero risk business. [PDF page 20 of the RD LINK ]. The “Discussion” ended by concluding: I failed to carry the “Burden Of Proof”. Ratemaking is prospective, therefore, “Retroactive Ratemaking” is prohibited. There is case law that prohibits line by line examination of items in a rate case. This is termed “Single-issue Ratemaking” and is prohibited. My complaints are both “Retroactive Ratemaking” and “Single-issue Ratemaking”. Initial Decision - Conclusions Of Law The “Initial Decision” concluded with ten “CONCLUSIONS OF LAW” and an “ORDER”. They mostly related to the “Discussion” conclusions and recommended that the complaints be dismissed in their entirety. For example: The PUC has jurisdiction I had the burden of proof and had to present “substantial evidence” Ratemaking is prospective and a rule against retroactive ratemaking has developed. “The claims raised by the Complainant are barred by law and no relief can be granted”. “The Complainant failed to prove that the public utility violated a statute, regulation, Commission order or tariff”. “THEREFORE, IT IS ORDERED: That the consolidated Formal Complaints filed by William Ferguson against Aqua Pennsylvania Wastewater, Inc. at Docket Nos. C-2023-3043108 and C-2023-3043109 are dismissed in their entirety”. Initial Decision - Next Steps Once the “Initial Decision” is posted, the parties have 20 days to file “Exceptions”. An “Exception” is basically a claim that the ALJ erred in some aspect of the decision. If no “Exceptions” are filed, the “Initial Decision” generally becomes final. But, for this case, “Exceptions” were filed: LINK

F I A S C O Google’s definition: “A thing that is a complete failure, especially in a ludicrous or humiliating way”. Prologue What follows is way too long. It is the story of a meeting that culminated an effort to establish accountability for questionable claims made justifying the sale of New Garden's sewer system to Aqua Pennsylvania. We think the result of the actual meeting was a total fiasco. It just takes a lot of space to put all the events into context. But the real lesson to be learned is how government officials can control the "process" to effect the outcome they want. If you are in opposition to something local officials want to do, we recommend you at least scan through this and gain insight as to what you may be up against. The November 21, 2022 New Garden Township Meeting Background New Garden Township spent over four years from 2016 – 2020 selling its sewer system to Aqua Pennsylvania. In hindsight, there were a number of questionable aspects to the sale that are documented elsewhere on this website: #1 - The need for a huge rate increase without a sale (LINK ) #2 - The need for $12 million worth of upgrades if there was no sale (LINK ) #3 - The promise of a ten year rate cap that was broken before the sale (LINK ) #4 - A three step 30% rate increase in the middle of the sale process (LINK ) The sale was executed at the end of 2020. Eight months later Aqua filed for a general rate increase. In mid-2022 Aqua instituted jaw dropping rate increases. Here is a picture of our rate increases: TOTAL RATE SHOCK! The green line is the rate increase over what was in place when the sales contract was signed in 2016. We had been told rates would go up almost 80% if the system was not sold. We think that 80% was a scare tactic to justify selling the system to Aqua (LINK ). Well, the system was sold, but not before scuttling the rate cap (LINK ). Then Aqua raised rates for their "average customer" almost double New Garden’s 80% scare tactic. The red line is the increase at the time the higher rates went into effect. The difference between the two lines is the 30% rate increase New Garden instituted starting in 2019. The need and reason for that increase is also questionable (LINK ). We wanted answers During the summer of 2022 when New Garden residents received their sewer bills, they were outraged. One focus of this outrage was New Garden’s Board of Supervisors (BOS). What we were seeing bore no resemblance to the promises made before the sale. In particular, one member of Keep Water Affordable (KWA) put a lot of pressure on the BOS to explain what happened. We had dug into the records from the time of the sale and found that many of the pre-sale claims were questionable. We wanted straight answers on these issues. Ultimately, the BOS agreed to hold a special meeting on the issue. Meeting Plan KWA worked extensively with the chairman of New Garden’s BOS to plan how the meeting would be conducted. Between October 6th and November 14th, there were 15 phone calls totaling 3 ½ hours (per cell phone records). Points made during these discussions included: #1 - The usual format, listening to prepared comments from a few speakers followed by limited time for questions, would be a waste of time. #2 - We had uncovered irregularities in the public records that we believe need to be explained. #3 - We wanted an open dialogue with the principles of the sale negotiations. The BOS chairman and KWA finally agreed that KWA would lead the segment of the meeting that addressed the issues we were concerned about. Here is a summary of our final understanding: #1 - KWA was best prepared to keep the discussion focused on the issues. #2 - Aft er the routine business part of the meeting, the Chairman was to give an introduction and then turn the meeting over to KWA. #3 - We planned to ask specific questions to get at the details behind the issues we raised. These questions were primarily aimed at the key players involved in the sale negotiation. #4 - Although the current Board also needs to be part of this discussion, the key players are best equipped to address the issues in detail. KWA Meeting Preparations With the above plan in place, we went to work preparing our part of the meeting. We created a PowerPoint slide deck designed to lead a discussion through the key issues. We were aiming for a dialog with the individuals who were making claims that we did not find aligned with the data we had dug out. Really, we felt we were loaded for bear. Here is the slide deck we prepared. It really was not intended to be viewed on a stand along basis. The dialog that went along with it is important. Therefore, we have annotated key slides with some comments. Those comments are found in red boxes in smaller font size. Click the following button to download the charts: New Garden Meeting Preparations New Garden was also evidently doing some preparations as they requested a list of the things we wanted to address. Here is what was sent 10 days before the meeting: "Here are the MAIN ISSUES [emphasis added] we will pursue at the meeting on the 21st. We will be prepared to ask specific questions aimed at these issues. Please call with any questions." "1. NGT claimed the sewer system needed a multi- million-dollar investment because of required capital improvements. We want to see the specifics of those improvements and their status." "2. To pay for these improvements, NGT estimated our rates needed to go up by 70%. We want to see the details of this estimate. " "3. We want to see the financial status of the sewer system at the time of the sale. " "4. The original agreement with Aqua included a two-year rate freeze and eight more years with a 4% cap on annual growth. Why were the freeze and cap removed?" "5. Prior to sale closing NGT instituted a 30% rate increase over a three-year period. With the sale imminent, why was this increase needed?" "6. NGT promised to create a “rate stabilization” fund to help offset increased rates under Aqua. Does the Township intend to fulfill this promise?" "7. In the final approval of the sewer system sale, the PUC ordered Aqua to set a rate structure for NGT equal to the rates of Aqua’s Zone 1. In the final tariff, NGT rates far exceed those of Zone 1. As a party to the agreement , does NGT intend to take action to assure the agreement terms are met?” Drumming Up Support For The Meeting The big meeting was scheduled for a couple of weeks after the 2022 general election. Since New Garden is a small township with only three polling places, we decided to promote the upcoming event at the polls on election day. As people LEFT the polling places, we passed out the handbills at the right. They were effective. On the night of the meeting about 300 people came. It was standing room only. This article shows a picture of the crowd from the back of the room: (LINK ) The High Noon Bombshell At 11:59 AM on the day of the meeting – just seven hours before it started – we got a call from the BOS chairman saying WE WERE BEING SHUT OUT OF THE MEETING. We would not be allowed to run the part of the meeting focused on our concerns. However, we would have the opportunity to ask our questions during the questions part of the meeting. He assured us the meeting would go “until all your questions are answered”. The Meeting Structure According To New Garden The New Garden BOS came to the meeting with this 19 slide PowerPoint presentation: Highlights include: Chart 3 is what we think is a self serving statement about their role in the sale process. Chart 5 is an agenda. #1 - “Rules” #2 - “KWA Questions” #3-8 - Speakers addressing the “KWA Questions. #10 - Resident and ratepayer Q&A Key observations about the “KWA Questions”. #1 - The term “Questions” is a mischaracterization of our intent. #2 - We s ent a list of “Issues” that we wanted to reconcile public statements with conflicting actual data at the time those statements were made. #3 - That requires an airing of the public statement, the actual data and a dialog with the individuals involved. #4 - The New Garden BOS transformed those “Issues” into “Questions” and then enabled the responsible individuals to address them however they wanted. They did not have to address the conflicting data or engage in any Q&A. KWA’s View Of The Meeting Structure This is fairly simple: #1 - The BOS framed the meeting as providing information about the sale and dispelling misinformation. #2 - The “Issues” were re-cast into “Questions” #3 - The key individuals we wanted to engage on the “Issues” were then given unlimited time to “answer” the “Questions”. No surprise, the standard party line was just repeated. And, they took two hours to do it. #4 - After the presentations, residents were allowed to speak – with severe limitations: A) You could speak ONCE - three minutes maximum. And, that time limit was strictly enforced. That did not exactly fulfill the promise "until all your questions are answered". B) No dialog allowed. Make a statement and/or ask a question, then shut up and sit down. C) If a question was included, one of the key individuals could choose (or not) to respond however he wanted. But, absolutely no back and forth was permitted. And, of course, no follow up was permitted. Not surprisingly, we did not find any of our “Issues” being addressed in any meaningful way. The “Moderator” When we arrived at the meeting, we were surprised to find the meeting included a “moderator”. This was an individual hired expressly for that purpose. We found him curt, loud and abrasive – not someone you would want to be friends with. However, he was VERY GOOD at his job. As the meeting wore on and it was evident to those present that the “Issues” were not being addressed, there were some grumblings. The “moderator” did not tolerate that kind of thing. Video Record of the Meeting Courtesy of Food and Water Watch most of the meeting was recorded on Facebook videos. However, after a couple of years Facebook took the videos down. We do have mp4 copies, but they are HUGE files, much to big to post here. The Presentations A summary of the presentations follow: Introduction by David Unger, a member of the BOS: . Included is a reading of the KWA “Questions”. Spencer Andress (a key figure for New Garden in the sale) addresses questions on investment and rate increases. He drones on for 40 minutes reading from a stack of papers. The segment from 40:30 – 43:40 is worth watching. The crowd recognizes what is happening and is tired of it – and, makes it known. This is also a segment where you can see the “Moderator” in action. Vince Pompo (the New Garden Solicitor for the sale) addresses the PUC approval process at length. At 58:20 – 58:50 he specifically blames the Office of Consumer Advocate (OCA) for the dropping of the rate cap. That is debunked here (LINK ). David Unger addresses a couple of questions about the use of sewer sale money. Of special interest is the segment on funds for rate mitigation - one of our hot button issues. We see this as "switcheroo #1" along with a side step shuffle. It is a case of being asked one question, but answering another - It is covered in detail here (LINK ). New Garden Township hired a law firm to investigate potential legal issues with the sale of the New Garden sewer system. This segment is their report. This was important and the stories are told separately: #1 - New Garden's Solicitor had a legal conflict of interest in the sewer sale to Aqua. And, it is apparent to us, that New Garden clearly does not want anyone to learn about the details (LINK ). #2 - At a previous public meeting New Garden had agreed to a general investigation into the transactions around the sewer sale. This was to be the report on that investigation. But, unfortunately, what we found was "Switcheroo #2" - and it was a big one: (LINK ). It is Aqua’s turn. Their Operations Manager essentially paints the condition of the system as being in a crisis at the date of acquisition and Aqua was the White Knight that swooped in and fixed it. Their finance guy then talked about the PUC’s process for raising rates. He essentially blamed the PUC for the large rate increase – Aqua just did what the PUC told it to do. Public Comments There was a break and then those who wanted to speak were allowed three minutes each. The basic rules were make your statement, then shut up and sit down. No dialog, no follow up. A total of 26 people spoke. As is typical in these situations, everyone had something different to talk about. One person even complained about an issue with their water – which had no connection to New Garden or Aqua. We think the meeting format was very successful in stifling all issues that could bring into question how the sale of the sewer system was conducted. F I A S C O Google’s synonyms: “blunder” "breakdown” “debacle” “disaster” “embarrassment” "failure” “farce” “flop” “mess” “stunt” “washout” Conclusions The above synonyms pretty well sum up what we think of the meeting. Nobody had to account for their actions and representations leading up to the sale. The meeting process saw to that. The people in attendance saw through it and were not happy about the outcome. We think one of the most deceitful things about the meeting is how we were led to believe we were to lead the core of the discussion for the critical issues. Reflecting on New Garden’s preparation for the meeting, it was extensive. We do not think there was any flip flop just before noon on the day of the meeting. The very fact that a “Moderator” had been hired is indicative of the amount of advance planning that went into the meeting. We think that the need for a “Moderator” also shows the focus New Garden had on controlling the flow of the meeting. The extensive preparation of the various speakers also attests to the meeting planning. In subsequent interactions with board members we found them very self righteous about how they had been responsive to our "questions". They had provided answers on everything.

Aqua’s Complaint Replies Here is a copy of Aqua’s reply to my consumption volume complaint: And, here is a copy of Aqua’s reply to my trucking complaint: Highlights For Aqua’s Complaint Replies I found Aqua’s filings difficult to read. “Admitted” appears 64 times and “denied” appears 69 times. Both are used as having technical legal meaning. For example, Aqua “admits” that my complaints reference filings Aqua made in its 2021 rate increase filing. However, any characterization I make is “denied”. Both go on like that over and over and over. Essentially, each reply goes through both complaints denying all the points I made. After denying all the issues raised in the two complaints, Aqua moved on to raising a “New Matter”. This is another technical legal term used to raise issues about why the complaints should be thrown out. New Matter highlights include: The complaints are barred by Section 316 of the Public Utility Code. That section of the code essentially says that any final action by the PUC is cast in stone and cannot be challenged. The complaints are barred by the doctrine of collateral estoppel. This is a double jeopardy defense. It says you cannot re-litigate issues that have already been decided in a prior legal case. I participated in the public hearings for Aqua’s 2021 rate case and did not bring up either issue. None of the major parties to Aqua’s 2021 rate case brought up the issues raised by my complaints. My complaints amount to retroactive ratemaking and single issue ratemaking and, therefore, are barred. My Answer To Aqua’s Filings I filed counter replies to each of Aqua’s filings: Here is the consumption volume filing: LINK Here is the trucking filing: LINK They say essentially the same thing: Aqua did not fulfill its obligations in its rate filing. The reason the PUC exists is to protect ratepayers from predatory practices of utility companies. The complexity of rate setting has evolved so that it is easy to conceal items that should not be included. The PUC should be pleased when issues like this are identified and can be acted upon. The complaint issues resulted in significant economic impact on New Garden customers. Correction can be made without a re-do of the rate setting process.

Act 11 Pennsylvania’s Act 11 plays a major role in determining how much regulated Big Water companies are allowed to charge us for water and sewer service. This legislation allows the Big Water companies to move sewer revenues to water customers or to other sewer systems – “if in the public interest”. Basically, it is used to temper “rate shock” for the customers of newly acquired municipal systems. Since 2016 Big Water companies have been buying municipal sewer systems at premium prices enabled by Act 12 . Those premium prices translate to significantly higher water and sewer bills to pay for the investments. The Big Water companies and the PUC use Act 11 to temper the exorbitant rate increases by moving part of the increase to their base of water customers. This practice really stinks – but, it is legal. Your water or sewer bill should pay for the cost of service. If your supplier is a for profit company, that company’s profit is a part of the bill. But, because of Act 11 your bill can include your company’s cost and profit for totally unrelated systems in other parts of the state. The chapter on Beggar Thy Neighbor has the example where Aqua water customers 300 miles away in Warren County PA are helping subsidize our New Garden sewer bills. There is absolutely no connection between them. We did not ask for this and think it stinks, but it is happening. Background Act 11 was passed in 2012. It is a ten page bill of dense legalese dealing with recovery of costs for capital improvements. It applies to all regulated utilities, not just water and sewer. The following is the single paragraph slipped into Act 11 that opens a loophole for the Big Water companies to drive a truck through: "(c) Segregation of property .--When any public utility furnishes more than one of the different types of utility service, the c ommission shall segregate the property used and useful in furnishing each type of such service, and shall not consider the property of such public utility as a unit in determining the value of the rate base of such public utility for the purpose of fixing base rates.  A utility that provides water and wastewater service shall be exempt from this subsection upon petition of a utility to combine water and wastewater revenue requirements.  The commission, when setting base rates, after notice and an opportunity to be heard, may allocate a portion of the wastewater revenue requirement to the combined water and wastewater customer base if in the public interest." What this means is: #1 - Big Water companies like Aqua Pennsylvania and Pennsylvania American Water can ask the PUC to allow collecting of sewer revenues from their water customers. #2 - But it is different for a company like PECO - a utility that supplies both gas and electric service. PECO is strictly prohibited from collecting gas revenues from its electric customers or collecting electric revenues from their gas customers. How It Is Used Rate cases for Aqua in 2021 and American in 2022 & 2023 illustrate how costs are moved from one customer segment to another. First Aqua in their August 2021 rate case. Aqua Pennsylvania August 2021 Rate Filing The top line titled “Revenue Increase” is the increase Aqua claimed was necessary to cover costs plus deliver their proposed return on investment. As you can see, the sewer customers would be hit with the largest percentage increases – almost 7X the water increase. This is logical since their acquisitions were all sewer utilities. Aqua proposed to temper the “rate shock” of the sewer increases by moving almost $21 million of the sewer revenue to water customers. The total “required revenue” increase for sewer customers was $32.4 million. Aqua wanted to move $21 million (64% of the increase) to their water customers! This would have had raised the rate increase for water customers from ~13% to ~17%. Those water customers had nothing to do with the sewer acquisitions but would be required to pay for the majority of the increase. Does that make sense to you? The final decision by the PUC did two things: #1 - The PUC trimmed Aqua’s allowed revenue by $26 million (a whopping 4% reduction). #2 - It reduced the Act 11 revenue shift to ~$11 million. That was still 38% of the sewer increase. That increased the “rate shock” for sewer customers. And, we can vouch first hand that there was a lot of rate shock when the first bills arrived with the increased rates. Pennsylvania American Water May 2022 Rate Filing Like Aqua, the “revenue increase" for sewer customers was about 7X the water increase on a percentage basis. American wanted to move almost $73 million of revenue from sewer users to their water customers. They wanted their water customers to pay 79% of the increase for sewer! That would have doubled the increase seen by water customers from 11% to 22%. In its final decision the PUC did the following: #1 - American’s revenue was trimmed by $35 million – another whopping 3.5% of total revenue. #2 - The Act 11 adjustment was substantially scaled back to $27 million/yr. That is still water customers paying 29% of the sewer cost increases. #3 - Water customers were hit with a 12% increase while sewer customers are paying 46% more. Pennsylvania American Water November 2023 Rate Filing See next section for the final outcome We find two things astounding about this case: #1 - American wants to move all but $5 million of its sewer increase to its water customers. That is $71 million out of $76 million or 94% of the increase! The total sewer increase would be reduced to only 3% while water customers would see a 24% increase. Why should the water customers have to pay for American's sewer acquisitions whose costs are inflated by Act 12 (LINK )? #2 - American is proposing increases for systems it does not even own yet - BASA and Brentwood. And, BASA figures prominently in the proposed Act 11 adjustment. So, go figure on how all that gets worked out when it comes to setting rates. When the rate increases go into effect, it would absurd to let American collect revenue from water customers for a system it does not own. Pennsylvania American Water November 2023 Rate Filing - Final Outcome As noted above, American proposed increases and Act 11 adjustments for systems it does not even own yet. That did not fly. The above table shows the proposals without those two systems. The revised numbers show over a 15% increase for water customers and 27% for sewer customers. However, American wanted to move all the sewer increase to its water customers. That did not fly with the PUC. The Act 11 adjustment was cut in half. This had the effect of bumping the water increase from 8% to almost 11%. The sewer customers wound up with an increase of 6% - 7%. Conclusions Act 11 allows both Big Water and the regulators to play games with rate increases for expensive acquisitions. All in the interest of avoiding “rate shock”. It could also be described as covering up the true cost of these “Fair Market Value” acquisitions. There is nothing equitable about palming off cost increases on customers totally disconnected from those increases. It will be interesting to see what happens with the next round of rate increases in 2024. There are several possibilities: #1 - If the PUC really moves rates to reflect the cost of service, the current sewer systems are apt to see another large increase. Along with this the Act 11 adjustment should go down and the water increases would be much more modest. #2 - In Pennsylvania over 98% of Aqua and American water customers are lumped into one rate category for each company. This is true whether or not individual systems are connected. This is another form of expensive systems being subsidized by lower cost ones. The same might happen to sewer systems. You could wind up with one sewer rate for everyone, regardless of individual cost. #3 - Almost certainly there will be additional “Fair Market Value” acquisitions. It is likely that new Act 11 adjustments will be applied to those situations. #4 - It is almost certain there will be various forms of “Beggar Thy Neighbor” situations.