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Filings After The Initial Decision Once the Initial Decision has issued, the complaint participants have the opportunity to make additional filings before the PUC Commissioners issue their Opinion and Order. The most common filing is "exceptions", which generally claims sort sort of error in the ruling. When exceptions are filed the other parties can file "reply exceptions", to rebut what the other has filed. Other filings can also be made. For my complaints, we filed exceptions, a petition to re-open discovery and a motion to strike part of Aqua's reply exceptions. Aqua did not file any exceptions. No surprise since the Initial Decision was everything they wanted. Aqua did file replies to all of our filings. The sections that follow summarize all of the filings. The Filing Of "Exceptions" An "Exception" is an appeal to the Public Utility Commission (PUC) that the “Initial Decision” made an error in some aspect of the law. It asks them to fix it. I had the good fortune to know a top notch utility lawyer who had actually served 16 years as a PUC Commissioner. I asked if he would advise me on my options at this point. He agreed and looked at the appropriate case filings. He was appalled at what the PUC had done. Without being asked he proceeded to prepare an “Exceptions” filing, a “Motion” and a “Petition”. Key points in the “Exceptions” filing were: The integrity of the ratemaking process is at stake. The PUC relies heavily truthfulness and completeness of public utility filings. In fact, PUC filings are subject to the penalties for perjury and falsification to authorities under Pennsylvania law (18 Pa.C.S. §§ 4902 for perjury & 4904 for falsification). Charging for a major expense that is not being incurred is not just and reasonable under 66 Pa.C.S. § 1309(a). Pennsylvania law provides the ability for post rate case relief via 66 Pa.C.S. § 1312(a). I carried my burden of proof and Aqua failed to rebut it. In fact, Aqua had a higher standard of rebuttal under 66 Pa.C.S. § 315(b). The “Initial Decision” should have considered the merits of the case. The case should be remanded to the ALJ for further discovery. Aqua has the right to reply to the “Exceptions” and reply they did. The short summary is that Aqua refuted everything. No surprise. Here is a link to the “Exceptions”: LINK Here is Aqua’s reply to the “Exceptions”: LINK Petition To Reopen Discovery My new found legal help (see second paragraph above) filed a petition to reopen discovery for the case. That would have presented the opportunity to require Aqua to produce hard evidence about when it ceased trucking. Reopening was a long shot, but Public Utility Commission (PUC) regulations do allow it. Actually, I was not aware that I ever had the opportunity to require Aqua to document anything. I found nothing in PUC procedures about it. It certainly would have been appropriate for this case. Naturally Aqua replied to both filings refuting everything I claimed. Ultimately, the PUC denied this petition. Here is a link to the petition: LINK And here is a link to Aqua’s reply: LINK Motion To Strike Part Of Aqua's Exception Reply My new found legal help (see above) filed a motion to strike part of Aqua’s “Exception Replies”. This focused on Aqua’s defenses invoking the prima facie reasonableness of Commission-approved rates, the rule against retroactive ratemaking, and the prohibition against single-issue ratemaking. Based on the various laws cited these defenses are irrelevant to the case. Of course, Aqua replied refuting everything. The PUC ultimately denied the motion. Here is a link to the motion: LINK And here is a link to Aqua’s reply: LINK

The Appeal To Pennsylvania’s Commonwealth Court When the “Opinion and Order” came down totally denying my complaints, both my pro bono attorney and I were very much deflated. We felt that the PUC really missed key legal issues. My attorney said that the only alternative at that point was to file an appeal with the Pennsylvania Commonwealth Court. Based on the legal issues he thought that the odds of success there were fairly good. However, that task was bigger than he wanted to undertake. So, we commiserated a bit and agreed that we had to let it go. About three weeks later I get an email from the attorney saying we need to talk. I wasted no time dialing his number. The issues with the PUC’s rejection of my complaints had been eating at him. This was an important issue that needed to be addressed. He was willing to take the case to the Commonwealth Court if I was. We agreed to proceed. On July 17, 2025 my attorney filed the appeal. We are case 876 CD 2025. Here is a copy of that appeal: Key points of the filing include: We are only appealing the decision on the trucking complaint. We believe this is a clear cut case of responsibilities not being met. And, it is easy to understand. The consumption volume complaint gets mired in lots of detail and math, making it hard to understand. The Commission erred by imposing the wrong standard for burden of proof. I DID meet the burden of proof even under the standard used by the Commission. The Commission failed to recognize a judicially recognized exception to the rules against retroactive ratemaking and single-issue ratemaking. The integrity of ratemaking is an issue because the Commission heavily relies on the truthfulness and completeness of utility filings. In fact: “rate case filings are made subject to the penalties for perjury and unsworn falsification to authorities under Pennsylvania’s Crimes Code”. The Commission’s decision is not supported by substantial evidence and wrongly relied on Aqua’s testimony. The decision by the Commission sends a message to would-be pro se complainants – they needn’t bother. If you go to the Court’s website ( LINK ) you can view a summary of case activity: There will be a "search by" drop down box - select "docket number". Enter case 876 CD 2025 and click "search". Finally, click on the “D” on the right side and a summary of the case will be displayed. Since submitting the appeal filing there have been the following actions: Aqua has signed on to participate in the case. On 8/29/2025 the PUC certified the list of documents for the case. That established the date from which the Commonwealth Court set a schedule for the case. Here is a copy of the list: On 8/29/2025, the Commonwealth Court issued a briefing schedule. The briefs for the case are due 10/8/2025. On 9/18/2025 my lawyer filed a request to extend the filing deadline by 30 days. The other lawyers involved indicated their non-objection. On 9/22/2025 the Commonwealth Court granted the 30 day extension request. On 11/10/2025 my brief and Reproduced Record were filed with the Commonwealth Court. The brief is 70 pages long with a number of in-depth legal discussions. Here are key highlights for quick reading: #1 - PDF pages 3 - 4 summarize the arguments supporting each of the legal questions. This is actually part of the table of contents, but is still an excellent summary. #2 - The introduction on PDF pages 9 - 11 explains why this case is important and gives some background on utility regulation. #3 - PDF page 14 tabulates the legal questions involved. #4 - PDF pages 33 - 38 are an excellent overall summary of the case. The Reproduced Record is too big to post here (350 megabytes), but here is our brief: The PUC and Aqua filing were due to file their briefs on 12/10/2025, but they each asked for a 45 day extension. On 12/1/2025 the Court granted that extension. On 1/29/2026 both the PUC and Aqua file their briefs: The final step before the Court acts was for us to file a reply brief. This turned into a bit of an involved process. Normally there is a 7,000 word limit for reply briefs. Due to the complexity and importance of the case my lawyer filed a request for 3,000 additional words. He expected that to be granted without opposition. However, both the PUC and Aqua objected and it took until 4/14/2026 for the court to issue an order denying the additional words. On 4/27/2026 we submit our reply brief: I recommend PDF pages 7 -13 as an excellent summary of the issues in this case. On 5/21/2026 the Court issues a brief order indicating that the case will be decided based on the briefs without oral arguments. It is possible that the Court could change its mind about oral arguments, but that is not likely. It is also possible that the PUC or Aqua could request oral arguments, but we will just have to wait and see on that. Otherwise, the next action is up to the Court.

The PUC's Opinion and Order Introduction Now it was up the Commissioners to render a decision called an “Opinion and Order”. The Commissioners have an Office of Special Assistants that does much of the leg work. They evaluate all the case filings and prepare a proposal for the Commissioners. There may be some back and forth, but ultimately they prepare the proposed “Opinion and Order” for each case. Then at one of the regularly scheduled public meetings of the Commissioners, the proposed “Opinion and Order” is voted on. At voting time the Commissioners have three options. There is the standard “Yes” or “No”. They can also offer a “Motion” to take some specified action on the case. These meetings are not debating sessions. A Commissioner may make a statement about a particular case, but there is no debate. Therefore, it is no surprise that most votes are “Yes”. The Vote The “Opinion and Order” for my cases was voted on June 18, 2025. It was essentially a total acceptance of the ALJ’s “Initial Decision” and, therefore, a rejection of my complaints and subsequent “Exceptions”. I found the vote itself most unsatisfying. The Commissioners spent almost the first 15 minutes of the meeting talking about an Aqua acquisition of Beaver Falls. My case was next on the agenda. However, the chairman proposed an “omnibus” vote of my case and the next complaint on the same page of the agenda. The vote was 5 – 0 to accept both proposals. Bang! The gavel comes down. My complaints are rejected. They did not even vote on it as a stand alone case. Here is that Opinion and Order: LINK Rejection Highlights The “Opinion and Order” pretty thoroughly rejected everything. The major issues were “Burden of Proof”, “Single Issue Ratemaking” and “Retroactive Ratemaking”: “…we find that the Complainant did not meet his burden of proof …” “We find that the Complainant is improperly seeking single-issue ratemaking in his claims …” “…we find that the Complainant is seeking unlawful retroactive ratemaking with this claim. …” I find the “Burden of Proof” rejection is especially puzzling for the trucking complaint. I presented three independent elements of evidence that Aqua did not fulfill its obligations. Without comment that was brushed aside. It makes me wonder what, if anything, would meet the PUC’s “Burden of Proof” standard. Disposition Of The Post Hearing Filings Here are the PUC findings with my comments in [brackets]: Disposition of the petition to reopen the record “The information the Complainant is seeking was discoverable, and thus available, prior to the closing of the record. Consequently, this information constitutes neither new nor persuasive evidence sufficient to warrant reopening the record.” [But, how was I to discover it? The information provided by the PUC is silent on the issue. The pro se complainant is at a huge disadvantage]. Disposition of Exception #1 – I met my burden of proof part 1 . For the consumption volume complaint: “…the Complainant generally argued that Aqua miscalculated the amount of wastewater New Garden customers would generate, resulting in rates that are too high.” This is how the “Opinion and Order” addressed the issue: “We disagree with both of the Complainant’s claims.” “…Aqua testified that the Company used the wastewater data available from New Garden Township, as provided in the Acquisition Proceeding.” [Obviously nobody fact checked Aqua because that was Aqua’s data table not New Garden’s] “Aqua also testified that if the relief Mr. Ferguson sought was granted, Aqua would be justified in charging higher rates to New Garden customers, rather than lower rates.” [I believe that is very deceptively stated. Aqua’s full answer was that if the volume did not change , the rates would have been higher. But, the PUC left the volume part out. And, a major issue was that volume was understated.] “Aqua provided in its testimony that the rates for New Garden wastewater customers were recovering less than the actual cost of service. The full cost of service would have been approximately $5.4 million in the 2021 Rate Case.” [I classify this as an irrelevant Aqua talking point. Whether or not Aqua collected its full cost of service from New Garden customers has no bearing on my complaints. In fact, Aqua got its full cost of service. The PUC granted Aqua the full $5.4 million/yr - $4.4 million/yr directly from New Garden customers and $1.0 million/yr from other Aqua customers via an Act 11 adjustment.] Disposition of Exception #1 – I met my burden of proof part 2 . For the trucking complaint: “…the Complainant submitted that Aqua did not continue to incur an expense that it estimated would continue through the FPFTY, and thereby overcharged New Garden wastewater customers.” “We disagree with both of the Complainant’s claims.” “…Aqua testified that at the time of the filing of the 2021 Rate Case, the Company used the data available to it. Aqua was aware of the cost and expected this expense to continue through the FPFTY.” [But, Aqua never provided any evidence to support these assertions. The PUC is taking Aqua’s word as absolute truth. And, to do that, the PUC had to ignore solid evidence to the contrary.] “Aqua explained that, after the trucking expense ended, the Company incurred additional costs that were not included in the 2021 Rate Case filing for additional power, labor, and outside contractor costs.” [Two issues here. First Aqua, never offered evidence to quantify or document this claim. It could be there was $5.00 of additional cost. Second, it is irrelevant to the complaint.] Reflections No where in the “Initial Decision” or “Opinion and Order” is there any reference to any of the evidence in the complaint filings and the exhibits entered into the record. The PUC guide on formal complaints clearly states that I had to submit my exhibits in advance. Evidently there was no similar requirement for Aqua. Aqua submitted nothing in advance, but was allowed to file hundreds of pages after the hearing. Both the “Initial Decision” and “Opinion and Order” made reference to the issues I raised, but merely in the form of citations. Generally those citations were followed by quoting Aqua statements refuting the complaints. But, Aqua’s statements were never backed by hard evidence. They were just Aqua statements. Both documents appeared to take Aqua’s statements at face value. My hard evidence refuting Aqua’s statements was ignored and never considered. Epilogue A complaint being dismissed by the Commissioners is the end of the line for most cases. If you want to contest the decision there are two basic options: Directly appeal to the PUC for some form of a re-hearing. This generally requires something new and substantial be introduced that had not been already considered. This clearly did not apply to my complaints. Appeal to Commonwealth Court. This is literally suing the PUC in the Commonwealth Court. It generally needs to focus on the fact that the PUC erred in how it applied the law. It essentially asks the court to order a correction if an error is found. One July 17, 2025 my pro bono lawyer officially entered the case and filed an appeal with the Commonwealth Court. For a number of reasons, we only appealed the trucking complaint. Here are more details on this filing: LINK

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

Trucking Complaint Background Several years before Aqua acquired New Garden’s sewer system, the South End treatment facility lost capacity to dispose of treated wastewater. It was a serious problem. You cannot stop the inflow and you cannot let the treatment lagoon overflow. The “emergency solution” was to truck wastewater from the South End facility to the East End plant, which had sufficient capacity. That “emergency solution” continued for several years. It was expensive. New Garden indicated it cost about $100,000/month. The trucking continued right up to the sale of the sewer system to Aqua. Trucking Complaint - The Issue About nine months after acquiring the New Garden sewer system Aqua filed for a rate increase and included a $1.2 million/yr trucking cost for the full period of the forecast. It represented 65% of the operating cost for the New Garden system. However, that cost was gone before the rate increase went into effect on May 19, 2022. In fact, the evidence indicates the trucking stopped before the end of 2021 when Aqua had the opportunity and obligation to remove that cost. My complaint asked the Public Utility Commission (PUC) to investigate when the trucking stopped and make New Garden customers whole if the complaint was validated. Trucking Complaint - The Evidence What follows came to light nearly two years after the sale at a New Garden Township public meeting on 11/21/2022. At that meeting Aqua’s Operation Manager stated that on the day of the sale Aqua contacted a Pennsylvania regulator and declared an emergency. I am speculating here, but I suspect that New Garden left the lagoon filled to the brim to minimize their trucking cost. In any event, Aqua immediately continued the trucking. The Operations Manager went on to tell about how as soon as Aqua took over they moved to activate an abandoned pipeline to pump the wastewater instead of truck it. Here is the video of that portion of his presentation: LINK And, here is my transcript of that discussion: LINK Pumping costs a tiny fraction of the trucking cost. Aqua was making a good move. Here are the key points made by Aqua’s Operations Manager: #1 - Aqua moved promptly to activate the line. #2 - Some repairs were required. #3 - Activation took about eight months while trucking continued. #4 - When the pipeline was started up, trucking stopped immediately. #5 - It was complete within the first year of operation. There are two pieces of additional evidence that Aqua eliminated the trucking operation before year end of 2022: #1 - After the 11/21/2022 New Garden public meeting, Aqua’s president sent a letter to New Garden customers commenting on the meeting. In it he said: “Initially, we had to truck excess treated wastewater from one wastewater treatment plant to another which cost more than $800,000. After several months, we replaced hauling with a pipeline connecting the two treatment plants. lt was work our experienced, dedicated, and creative employees completed safely and expeditiously. ” Here is the full letter he sent with the quote highlighted: #2 - Every year Aqua has to file an annual report with the PUC. That report includes a list of capital expenditures. Aqua’s 2021 report includes a line item titled “New Garden Dry Line Activation”. It tabulates a cost of $666,833 and that the project was in service by 12/31/2021. Here is a copy of the page from that report with line 21 highlighted: In summary, Aqua’s Operation Manager said the pipeline activation took about eight months and was complete by year end. Aqua’s President said that after “several months” trucking was replaced by a pipeline. Finally, Aqua’s 2021 annual report indicating the “New Garden Dry Line Activation” project was complete by 12/31/2021. Three solid pieces of evidence all saying the same thing. Trucking Complaint - Conclusions As a result of the 11/21/2022 New Garden public meeting I figured out that Aqua never had incurred the $1.2 million/yr cost it forecast. Therefore I proceeded to prepare a complaint to file with the PUC. Here is a copy of that complaint: I find Aqua including that trucking cost in the original filing to be highly questionable. Aqua was saying the cost would continue for nearly three years while at the same time working to eliminate it. In any event, Aqua had a legal obligation to remove that cost if it was eliminated by year end 2021. The above evidence cited clearly indicates that trucking stopped before then. But, Aqua did not remove the cost. Consequently, New Garden customers paid a total of $3.3 million for that non-existent cost. Aqua defended the trucking cost by stating that: #1 - The cost was never questioned during the rate case litigation. #2 - Since the rate case is complete you cannot retroactively change it. It is noteworthy that Aqua never stated when the trucking actually ended. It is very likely that none of the rate case participants outside of Aqua were aware of the project to eliminate the trucking. So, no surprise, they had no reason to question the cost. This is a second case of a situation that I thought the PUC would be shocked to learn about and take corrective action. Again, I was wrong. However, my stellar pro bono lawyer found this so egregious that we have filed an appeal of the PUC’s decision with Pennsylvania’s Commonwealth Court. Here is a link to that: LINK

Consumption Volume Complaint This complaint focuses on the issue that Aqua’s consumption volumes for New Garden Township customers differs substantially from actual use by those customers. The 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 total consumption volume of 104 million gallons per year. That is substantially less than the 126 million gallons New Garden reported during the last year they owned the system. When setting the per gallon billing rates, the lower volume results in higher rates. This difference could have a significant impact on rates. Second, Aqua charged New Garden customers different rates depending on consumption volume. The problem was that the forecast volume in each rate band bore no relationship to actual use by customers. Accurate rate setting depends on using accurate data. The discovery of the consumption volume issues came almost by accident. That story is not a core part of the issue, but this page tells the story if you are interested: Here is the actual complaint as filed: What follows covers the main issues one by one. Background The issues of my complaint result from Aqua’s consumption volume data in the following table: Table #1 - Aqua’s Consumption Volumes The above table is my consolidation of six pages of Aqua data. Six pages of what I consider very opaque consumption data (LINK ). This LINK shows the steps required to consolidate Aqua’s six pages into the above table. Aqua will probably dispute that this table really depicts their compliance data, but the following link shows how it matches gallon for gallon and dollar for dollar with their filing data: LINK Total Volume Issue The first issue with Aqua’s data is the total volume. The table shows an annual forecast of 104 million gallons. There are two pieces of evidence that indicate 104 million gallons significantly understates actual New Garden consumption.. The first is a communication with the then Chairman of New Garden’s Board of Supervisors, Stephen Allaband. During a meeting with him, he gave us the following: The source is credible and shows a wide divergence from Aqua’s number. The above is also Exhibit H of my complaint. No surprise, during the complaint hearing Aqua objected to that exhibit as “hearsay”. It could not be admitted as evidence because Aqua did not have the opportunity to cross examine the source of the data. Indeed, the ALJ excluded that exhibit from the evidence record. The second data source disputing the 104 million gallons is Aqua’s own filing data. Their data was broken into two parts: a “consumption analysis” for the twelve months ending 3/31/2021 and “Billing Adjustments”. Since the New Garden sale closed 12/20/2020, that “consumption analysis” essentially represents first quarter 2021 consumption. That consumption volume = 31,238,100 gallons. Annualizing that number = 112,890,163 gallons. That is lower than New Garden’s data but higher than Aqua’s. What we do not know is how complete Aqua’s 1Q2021 data was. So what happens if Aqua sets rates based on 104 million gallons and customers actually use 125 million gallons? If Aqua’s data accurately represented customer use patterns then Aqua would see a 20% bump in revenue. Given the $4.4 million/yr authorized revenue that would yield Aqua almost $900,000 extra revenue. Impossible Consumption Patterns Aqua used three rate bands to charge New Garden customers increasing rates for higher consumption volumes. There were three rate bands: 0 – 5,000 gallons/quarter 5,000 – 15,000 gallons/quarter Greater than 15,000 gallons/quarter. Aqua then applied those rate bands to three different category of customers: Residential Commercial #1 Commercial #2. Table #1 above shows Aqua’s forecast for each category of customer. The problem is that those volumes do not reflect actual customer use. To realize why these volumes do not reflect customer use patterns, you need to understand how the volumes in each rate band interact with each other. This is explained here: Impossible Consumption Patterns - Residential Customers For residential customers, Aqua’s consumption data skews use heavily towards the >15,000 gallon band. This is shown by the following chart: The green bars are Aqua’s first quarter 2021 data noted above. The red bars are Aqua’s full year forecast. It is obvious that Aqua’s forecast is weighted much heavier towards the >5,000 gallon customer. What is not obvious is that Aqua’s forecast use pattern requires that 2/3 of New Garden customers use zero water – unrealistic for anything other than a ghost town - and, New Garden is no ghost town. There is considerable math involved in arriving at this conclusion. The methodology is shown here: If you want to tinker with the numbers, here is the spreadsheet I used to do the above calculations. You will find two possible outcomes: an impossible negative volume or 1,303 customers using zero water. Commercial Customers For commercial customers, the issue is even more clear cut: the consumption forecast is actually mathematically impossible. For the Commercial 1 customers Aqua has 171 customers using 13,149,400 gallons in the 1,667 – 5,000 rate band. However, it would require 329 customers using the full 5,000 gallons to use that volume – almost twice the actual number of customers. And, those 329 customers would have to consume over 6.5 million gallons in the 0 – 1,667 rate band. That is 7.5X Aqua’s stated consumption for that rate band. Clearly an impossible situation. It is the same situation for Commercial 2 customers. Aqua tabulates 27.7 Commercial 2 customers. However, the middle rate band would require 49 customers using the full 5,000 gallons for that band. And, those 49 would have to use 10X the stated consumption for the lowest rate band. Clearly, both Commercial data sets are impossible. And, Aqua used that data to set rates. The detailed math for commercial customers is documented here: It is not possible to set fair and just rates using data that does not reflect actual consumption. Conclusion I believe the evidence clearly shows that Aqua understated New Garden’s consumption volume and used a totally unrealistic consumption pattern to set rates. I figured that the PUC would be outraged to learn what had happened and would take corrective action. I was wrong.

Detailed Summary Of The Complaint Hearing Introduction Hearings for “Formal Complaints” are very formal procedures. They are run by and Administrative Law Judge (ALJ). This is not a judge in the sense of a branch of government, but is an employee of the PUC. I saw somewhere that they are tenured positions giving them some degree of independence. There is a court reporter transcribing the entire proceeding. And, of course, there are the two parties to the case. The hearing is a public event and anyone is welcome to listen in. In fact, there was another member of KWA listening to the whole procedure. I was the only one speaking on my behalf. Aqua had a lawyer and their Manager of Rates as an “Expert Witness”. The process began with the ALJ laying out the process and expectations of the parties. Then she turned it over to me to make my case. My Introduction “What I intend to show today is that Aqua did not meet its obligation to provide factual and correct data for its New Garden sewer operation, and it was done in a way that a normal rate-setting litigation process would never uncover and that it would increase the profitability realized by Aqua beyond what was approved by the PUC ”. The Trucking Complaint I then proceeded with the trucking complaint. That was basically a presentation of the three elements of evidence that Aqua started their pipeline up and stopped trucking well before the deadline for making rate case adjustments. That meant Aqua had a legal obligation to remove that cost from the rate case. During my trucking presentation Aqua objected seven times. After the seventh objection the ALJ indicated she did not like all the interruptions. I suspect Aqua had several objectives here: Several of the objections were “hearsay’ relating to Aqua’s Operations Manager’s presentation at a New Garden Township meeting November 21, 2022. I think Aqua really wanted to keep that out of the case record. In the end it was admitted into the record and most of Aqua’s objections were overruled. My favorite “hearsay” objection was my statement about a 35% loss of capacity at New Garden’s South End treatment plant. That 35% was “hearsay”. In a sense that was true. But, the one I heard saying it was Aqua’s Operations Manager at the New Garden Township meeting. And, it was available for all to hear. Was Aqua’s Operations Manager an unreliable source? In any event, the 35% had zero significance to my case. I also think that Aqua may have been trying to rattle me. However, I had carefully prepared my presentation and never had a problem picking up where I left off. I concluded the trucking phase with a statement that the PUC should investigate when trucking ended and take appropriate action. At that point the ALJ wanted Aqua to cross examine me. Aqua deferred saying it wanted to cross examine the two complaints together. The ALJ agreed and I began my presentation of the consumption volume complaint. The Consumption Volume Complaint The consumption volume complaint is difficult to understand. There are a lot of numbers involved and you must understand how those numbers relate to setting rates. The key steps are: It starts with six pages of detailed Aqua consumption data for New Garden. LINK Those six pages get distilled down to a table of just twelve numbers that are fully equivalent to Aqua’s six pages of data. LINK An analysis showing how that table of twelve numbers does not represent actual use by New Garden customers. I presented this as a series of “Major Issues”. That was a lengthy process. Looking back at the transcript of the hearing, I do not believe that the ALJ really understood the significance of the consumption volume issues. Added to that were another six objections by Aqua. After I completed my consumption volume piece, the ALJ asked me a series of questions about my experience. She acknowledged that I was not your average layman. It appeared that she was trying to determine if I was an “Expert Witness”. Aqua Cross Examines Me Cross examination started with a series of questions that I believe were intended to discredit me. For example: “Have you ever been responsible for the preparation of an allocated cost of service study in a base rate proceeding before the Pennsylvania Public Utility Commission?” Clearly, the answer was “NO”. This also set up a contrast with Aqua’s witness who would later answer “Yes” to the same questions. A second line of questioning was whether or not I participated in the public hearing for Aqua’s 2021 rate case. I believe the intent was to establish that participating in the public hearings disqualified me from filing my two complaints. That was not overtly stated during the hearing but was part of Aqua’s replies to my complaint filings. The issue was if I had challenged the trucking cost during public hearings that would disqualify me from filing my complaint. Indeed I had participated in the public hearings. And, I asked what was a $1.2 million/yr cost called “Purchased Wastewater”. Aqua in its Main Brief answered it was the trucking cost. I did not challenge the cost as being inappropriate, but only wanted clarification of the vague term “Purchased Wastewater”. Aqua concluded its cross examination with this: “Is it your position today that Aqua has not charged you consistent with its tariff at any point, at any point in providing you service?” Of course, the answer was “NO”. The rate case ultimately produced billing rates that Aqua accurately applied to my bills. The real issue was that the data that went into setting those billing rates did not fairly represent costs and use for New Garden customers. That ended Aqua’s cross examination. However, the ALJ wanted to further pursue Aqua’s question about whether Aqua had correctly billed me. That discussion helped confirm my belief that the ALJ really did not understand that eliminating a major cost from a rate case would change the billing rates that resulted. Aqua's "Expert Witness" The next phase of the hearing introduced Aqua’s “Expert Witness”, their Manager of Rates. Aqua’s lawyer asked 85 questions that basically established that the 2021 rate case went through all the standard steps in arriving at an outcome. A few highlights: Aqua made a big deal that they did not collect “The Full Cost of Service” from New Garden customers. The full cost was about $5.4 million/yr while New Garden customers actually paid about $4.4 million/yr. I found that quite deceptive. Aqua DID collect the full $5.4 million/yr. Via Act 11, the PUC permitted Aqua to collect the $1.0 million/yr difference from other customers. Aqua addressed my allegation that the consumption volumes were understated. The answer was that Aqua used annualized number provided by New Garden from the acquisition. However, that data was never entered into evidence. It was merely a statement by Aqua’s witness. Of the 85 questions, exactly one concerned the trucking complaint. That exchange was: "Q. And could you please provide an overview of your understanding of Mr. Ferguson's complaint at c-2023-3043109? A. That is the expense complaint, and that alleges that New Garden customers have an expense included in their revenue requirement that Aqua is not incurring , and because of that expense that he has singled out, a refund to customers should be issued ." The ALJ asked Aqua’s witness a couple of questions and then turned it over to me for cross examination. My Cross Examination of Aqua's Witness Highlights include: I started by asking about the $1.2 million/yr trucking cost. Aqua’s witness replied that it was a “Purchased Wastewater Expense” and that it was $800,000 trucking and $400,000 other stuff. I noted that Aqua’s Main Brief clearly stated it was the trucking expense, so where in Aqua’s filings was it otherwise defined. She stated it was not. I asked if she knew Aqua was working to activate the pipeline to eliminate trucking. I believe the answer was most evasive: “At the time of filing, I was aware that there was an enormous purchased wastewater expense that we were incurring for hauling that and that we were actively searching for a solution, but that no solution had been found yet.” I asked if it was company policy for the operations department to communicate important milestones for a project that would impact rate setting. The question was not answered. I asked whether Aqua had formally authorized a project for the dryline activation. I feel there was some evasion here. There was never a direct answer about the pipeline project. With some questioning Aqua’s witness finally admitted only that Aqua had a project approval process. I asked if the New Garden volume data was publicly available. She said it was part of the New Garden acquisition settlement agreement. Again, I believe this is a deception. The settlement agreement contains a table with the consumption volumes (PDF page 38 of the Settlement Agreement: LINK ), but that is an Aqua document, not New Garden data. Finally I ask if having correct consumption volumes is important to rate setting. There was a clear “Yes” to that one, however, Aqua called them “billing determinants”. Aqua "Redirects" Questions To Its Witness This is important: Aqua stated that if there was a significant change in expense during the rate case, the filing would be corrected if the record was still open. But, Aqua did not become aware of any significant change. Finally, Aqua’s lawyer tried to make the point that if the PUC granted my complaint on consumption volumes, New Garden rates would increase. I believe the answer was another significant deception by Aqua. My complaint had two elements, under stated volume and incorrect distribution. Aqua's answer was that if the volume was unchanged , [emphasis added] then the rates would be higher. Which is true, but it side steps the critical point about a higher volume. The ALJ then asked Aqua’s witness a couple of additional questions and then turned it back to me to ask additional questions. My Second Cross Examination of Aqua's Witness A couple of important things came out: I asked what was the cut off date for making corrections in Aqua’s 2021 rate case. The answer was December 21, 2021. (I believe the docket record indicates it was January 21, 2022. See page 4 of this docket filing: LINK ). This is important because there is strong evidence that the trucking stopped before year end 2021. I then noted that she testified rates would go up if the correct distribution was used, but total volume remained the same. So I asked what “if the total volume was significantly higher, would that change the result?” It appears she dodged the question by saying she did not think that would be the case and that Aqua used the best information available. I pressed the question about IF the volume was higher could the rates be lower. Aqua’s lawyer jumped in and objected at that point. The objection was not sustained, but somehow I did not get back to the question – a mistake on my part. Entering Exhibits Into The Official Record That ended the testimony phase of the hearing. The next order of business was to identify all the exhibits that would be entered into the record. There are almost 1,000 pages of exhibits, only 47 of which are mine. Aqua filed a ton of rate case documents. A table of contents of the exhibits can be found here: My Closing Statement I made a very short statement that I believed I clearly had made my case about both complaints and that the PUC should investigate. Aqua's Closing Statement Aqua started by saying they were prepared to make a closing statement, but preferred to file “full merit briefs”. That did not excite the ALJ. She said: “I would love that, but we already had close to five hours of testimony and a lot of exhibits. I don't really see how merit briefs would contribute more than what's already been contributed”. The ALJ asked if I was okay with filing “merit briefs”. I was concerned that Aqua might be trying to pull something here. For example, the issue of “collateral estoppel” that was a “new matter” in Aqua’s reply briefs. The ALJ concluded she had all the information needed and Aqua's lawyer agreed to proceed without additional filings. Aqua then proceeded with a closing statement. With my comments in brackets, key points included: I did not carry my burden of proof, therefore, the complaints should be dismissed. [Naturally I disagree] The rate case was fully litigated and I had not disputed any of the actions of the proceeding. [true, but not relevant to my complaints] Once the tariff was approved, Aqua was legally bound to apply those tariff rates. [again, true, but not relevant to my complaints] There are general prohibitions against “retroactive rate making” and “single issue rate making”. And, my complaints are classic “single issue rate making”. [true but there are exceptions to those prohibitions. Utility misbehavior is one of them] Aqua testified that it did not collect the full revenue allowed by the 2021 rate case. [True, but irrelevant. Aqua was not entitled to that revenue. It was a parameter from which to set rates. Actual revenue would vary depending on how well Aqua performed against the many assumptions that went into setting that revenue. This became a significant issue during the subsequent appeal to the Commonwealth Court. Here are more details on the issue:] Aqua demonstrated that if my consumption volume complaint were granted, rates would go up. [only because Aqua assumed that their estimated total consumption volume did not change. A major part of my complaint was that the volume was understated.] With that the hearing was essentially over. The ALJ summarized the next steps the PUC would take and ended the hearing.

Website Structure Here are links to all the topics covered on this website Recent Site Additions: (LINK ) The Ba sics A page summarizing the fundamental issues (LINK ). The topics covered are: #1 - Water - a universal need #2 - Supply options #3 - A natural monopoly #4 - For-Profit versus non-profit #5 - Privatization of public systems #6 - Fair Market Value #7 - Website purpose The Playb ook When a municipality and Big Water are cooking up a deal, there are a number of common themes that play out. We call it the "Playbook" (LINK ). The elements include: #1 - The "Big Picture" - five charts summarizing what is going on (LINK ). #2 - A suitcase of money (LINK ). Lots of money. Supposedly "Free Money". We sometimes call this the irresistible "candy jar" offer. #3 - The suggestion that a municipality should not be in the utility business - leave it to the "pros" (LINK ). #4 - Claims that the system is "falling apart" and needs Big Water to fix it (LINK ). #5 - Without a sale, a huge rate increase will be needed (LINK ). #6 - Big Water can supposedly do it cheaper ( LINK ). #7 - There may be a promise of a rate cap for some period of time (LINK ). But, beware what happens when that rate cap expir es ( LINK ). #8 - There may be a promise to set up a rate increase mitigation fund (LINK ). New Garden made this promise multiple times in writing, but ultimately declined to do it (LINK ) #9 - Th e above items are "what" happens. Here is a "Roadmap" about "how" it happens (LINK ) Legislation in Pennsylvania Since 2012 Pennsylvania has passed two major pieces of legislation favorable to Big Water acquiring municipal water and sewer utilities (LINK ). Act 11 in 2012 (LINK ). This allows Big Water to move some costs between systems. It has been used to soften "Rate Shock" after a system has been sold. This is often a "Beggar Thy Neighbor" situation (LINK ) Act 12 in 2 016 (LINK ). This is Pennsylvania's version of Fair Market Value. We have also put together a bit of histo ry on the passage of Act 12. PA legislature - There is activity in the PA legislature to repeal or limit Act 12.Here is a link to specific bills that have been introduced: (LINK ). The Senate Democrat Policy Committee held a hear on January 22, 2024 to consider repeal or modification of Act 12. Two co-founders of Keep Water Affordable testified at the hearing. Full details here: (LINK ). Big Water in Pennsylvania Here is a profile of Aqua and American in PA (LINK ). Both companies are open and explicit about their growth strategy (LINK ). The non-profit organization "In The Public Interest " has published a study on privatization of water and sewer systems in Pennsylvania called "Water Wars In Pennsylvania - How Corporations Play The Long Game ". It is excellent. Check it out here: (LINK ). For-profit water and sewer utilities are natural monopolies. As such, they are regulated by the Pennsylvania Public Utility Commission (PUC). If they want to raise rates, there is a formal process they must go through. Here is a summary of that process: (LINK ). Aqua is just finishing a rate increase process. Here is a page summarizing some of the key issues and resulting rate increases: (LINK ). The differences between for-profit and non-profit The economic differences between a for-profit utility company and a non-profit municipal utility are striking. The following pages try to illustrate the differences without getting into too much financial mumbo jumbo. #1 - Here is a place to start. It covers many aspects of the issue and links to most of the items below (LINK ) #2 - Direct comparison of for-profit versus non-profit (LINK ). #3 - When a municipal utility wants to sell itself to a Big Water company, it should ask itself: What is the next best alternative ? If that is done objectively, we think they will find there is actually a better alternative - at least better for their constituents. Learn more here (LINK ). #4 - Depreciation. This is a major difference between for-profit and non-profit utilities. It is also a difficult to understand subject. This page tries to make it clear: #5 - Interest cost (LINK ). This is actually a plea for help. Interest is a major cost for Big Water utilities in Pennsylvania - and ratepayers pay the full cost. Yet there is a PA Supreme Court ruling that says interest is not an allowable cost. Is there a legal basis to charge ratepayers with interest costs? Our New Garden Experience Our sewer system was the first one sold under Fair Market Value in Pennsylvania. We think we were sold a very bad deal. The main driver seemed to the the $29.5 million purchase price, which was going to do wonderful things for New Garden. But, we think, things turned out very differently. There are a number of elements to this story. The items noted below are the key events in the sale process and subsequent rate increases. #1 - To start, h ere is a summary of the sale process (LINK ) #2 - A key justification for the sales was the claim that the system was falling apart and a huge investment would be required to fix it ( LINK ). The link pretty well debunks that claim. #3 - The follow on to the claim that the system was falling apart was the claim that without a sale an almost 80% rate increase was needed to finance the repairs ( LINK ). Again, that claim is pretty well debunked. #4 - The buyer's promise and later taking away of a ten year rate cap (LINK ). In retrospect that would have been an attractive part of the deal. However, before the deal closed, that rate cap was taken away for very questionable reasons. #5 - A three step, 30% rate increase in the middle of the sale process (LINK ). The reasons for this increase are questionable #6 - New Garden and Aqua executed the sale in December-2020. Aqua later filed for a rate increase that went into effect May-2022. When New Garden residents received their first bills with the full impact of the rate increase, the increases ranged from 21% to as much as 124%. The average was about 85%. Needless to say, there was a lot of "rate shock". Here is the full story ( LINK ). #7 - When we were hit with big rate increases in 2022, we pressed New Garden for answers on the above issues. New Garden agreed to hold a special meeting on the issue. We think it was a total fiasco. Here is the story (LINK ) #8 - Multiple times New Garden residents were promised in writing that some of the sewer sale funds would be used to mitigate against rate increases over and above the promised rate cap. That never came to pass. The full story is told here (LINK ). #9 - The role of trucking wastewater ( LINK ). An element of the "falling apart" claim was a real capacity issue at one of the treatment facilities. That facility could not dispose of all the waster water being sent to it. There was a very cost effective solution available, but New Garden did not implement it. Rather they decided to truck the excess waste water from one location to another. That was expensive and went on for five years. Other Odds & Ends Opposing privatization of your system (LINK ). Act early! About us (LINK ). Chester Water Authority (CWA) - This is our water supplier in New Garden Township. It is the target of a privatization attempt by Aqua Pennsylvania. We like CWA the way it is. Here is some background on the takeover attempt: (LINK ) Links to other useful websites (LINK ). The following are links to every website page Listed Alphabetically 2018 Rate Increase - The story of a questionable rate increase by New Garden 2022 rate increase - How Aqua's rate increase impacted New Garden Customers Act 11 - Summary of the tool used to move sewer costs to water customers Act 12 - The PA law that enables inflated sales prices for municipal water and sewer utilities After The Rate Cap - If you are promised a rate cap, what happens when it expires Aqua 2024 Rate Increase - The major issues and outcomes of the rate case Beggar Thy Neighbor - i.e. how to get someone else to pay for what you want Big Picture - Five charts on Act 12 acquisitions Big Water Profits - Big Water profits in PA and other states Bond Option - A ratepayer friendly alternative to a system sale Big Water Biz Profile - A profile of American and Aqua and their businesses in PA BW Growth Strategy - How the corporate parents of Big Water plan to grow their businesses Conflict - A story of legal conflict on interest in New Garden's sewer sale Contact - How to contact Keep Water Affordable - KWA CPLT #1 - PUC complaint details on New Garden use volume in Aqua's 2021 rate case CPLT #2 - PUC complaint details over New Garden sewage trucking in Aqua's 2021 rate case CPLT-Appeal - The appeal of the PUC's complaint denial to the Pennsylvania Commonwealth Court CPLT-AqData#1 - Technical details from Aqua's 2021 rate filing (see CPLT #1, above) CPLT-AqData#2 - Technical stuff on how Aqua's data from CPLT-AqData#1 was consolidated CPLT-AqReply#1 - Summary of Aqua's reply filings to my two complaints CPLT-Exceptions - Summary of actions we took when the PUC's Initial Decision dismissed the complaints CPLT-Hearing Details - What happened at the 11/25/2024 complaint hearing CPLT-Hearing ID - The Initial Decision after the 11/25/2024 hearing denying my complaints CPLT-OpManager - The key piece of evidence in the trucking complaint CPLT-Order - The PUC's final Opinion and Order denying my two complaints CPLT-Validation - Technical stuff validating my consolidation of Aqua New Garden use data CWA Status - Background, timeline and status of the attempt to privatize CWA Directory - This page Econ - The basis for why privatization is a bad deal for ratepayers Falling Apart - A common justification for selling a municipal system - often false Fiasco - The story of a 11/21/2022 official New Garden meeting to explain then recent rate increases For vs non profit - Why an acquisition always results in huge rate increases - it is baked in Governorlttr - An out of date letter to Governor Shapiro about CWA Higher Cost - Why Big Water's claims of lower cost are deceptive Home - Literally the home page for this website Interest - A request for help on who should pay Big Water's interest costs Legislation - Background on PA's Act 11 and Act 12 Links - Literally, links to other websites with related content Municipal Utility - Why local governments should provide water and sewer service NG Rate Cap - The offering and taking away of a ten year rate cap for New Garden's sewer sale NGT Case Study - The story of New Garden selling its sewer system to Aqua Oppose Privatization - Why and how to oppose sale of your municipal water or sewer system PA - A short summary of what is happening in Pennsylvania Pending PA Legislation - Self explanatory Playbook - Big Water's methodology for enticing local governments to sell PUC Complaint - The main page for the two PUC complaints against Aqua PUC Rate Process - Uses Aqua's 2024 rate filing to go through the steps for a typical rate case Rate Increase Needed - A big rate increase needed is usually justification for selling the system Rate Mitigation - How New Garden claimed it would offset big rate increases - but did not Road Map - Typical steps leading to a municipality selling a water or sewer system Sale Review - New Gardens big switcheroo in its promise to review its sewer sale Sample letters - Suggested letters to government officials about repealing Act 12 Search Results - self explanatory Senate Committee - The results of a committee meeting on repealing Act 12 Sewage Trucking - The story behind New Garden trucking sewage from one facility to another Subscribe - Sign up for our mailing list The Basics - Water and sewer service alternatives & why local non-profit benefits ratepayers The Suitcase Of Money - How money drives sale of municipal systems to Big Water Updates - What is new on this website

The Suitcase Full Of Money Offer What happens when a Big Water company knocks on the door and offers to buy your local municipal water or sewer system? Or, your local officials might independently “explore” a sale of the system. Either way, one of the early pitches will likely be the municipality getting a proverbial suitcase full of “Free” Money”. Like a “Candy Jar” in front of a child, it appears as one “sweet” irresistible temptation. Both Buyer And Seller Want Top Price This is a situation where both the seller and buyer want the price as high as possible. The reason is obvious for the selling municipality – more money for the government. But, why would the buyer want to pay more? That would be like a person shopping for a new car. For a car with a $25,000 sticker on it, The shopper asks the dealer if he would take $45,000 for it. Would you do that? It is different for Big Water. Within some limits, the more Big Water pays for a system, the greater its profits – and Big Water’s reports to investors makes it clear that growing profits is a major objective. This is a highly unusual situation where both buyer and seller want the price as high as possible. $$$ The Municipality Sees "Free Money" $$$ Big Water will tell you about the big fat check that you can spend however you want. It is “Free” Money”. No strings attached. There will be no need for a tax increase – a hot button for any politician. There will be emphasis on how this “Free” Money” can be spent on all kinds of projects for good causes. Your voters will love you. From the perspective of the local official this can be an amazing opportunity. The amount of money being offered is usually a “once in a lifetime” event. It is somewhat like winning the lottery. Municipalities are hounded to fund all kinds of causes. Big Water’s promise of “Free” Money” without a tax increase is highly seductive. Some elected politicians are likely to see it as being in their best interest for career advancement. Often they are quick to grab the money. NO - It Is NOT "Free Money" Indeed, the local government gets a big check. However, the reality is that the customer is on the hook for the entire sale price. Ultimately, rates will increase - probably dramatically. The regulatory process may delay these increases for a while, but they are inevitable. The following table shows rate increases for recent sewer acquisitions made in Pennsylvania. They are based on using 4,000 gallons/month, rates before the acquisition and rates after the first general rate increase: It must be made clear that these increases only cover investment made by Big Water to purchase the municipal system. Any improvements needed will be paid for by future rate increases. A Less Costly Alternative To That "Free Money" Sadly, selling a water or sewer system is usually the most expensive way to raise that “Free Money”. What local officials may not understand or choose to ignore is that there can be cheaper ways to fund those public good projects. Without a full analysis of the alternatives, they are not serving the best interests of their constituents. In all cases, it is the ratepayer who is left to pay the bill. In most cases, selling will be a negative to the public good. It should be the responsibility of your local officials to do a thorough economic analysis before selling their utility. A basic element of that analysis is: What are the other alternatives? That answer will almost always be that it is cheaper for their ratepayers if they issued a bond for the same amount as the sales price. Here is a detailed illustration of that analysis: (LINK ) The debt service on that bond will most likely be cheaper than the utility rate increases needed to feed Big Water’s profits and costs. The problem with issuing a bond is that your local officials would have to find a way to pay for it. Usually that means increasing taxes – not a popular alternative. If their taxpayers were given the choice between the supposed benefits and increased taxes, the most likely answer would be NO WAY! Selling Is A Backdoor Tax Increase So, to realize the supposed "candy jar" of benefits, the local officials choice is to sell a tax increase to residents or sell the utility. Since selling a utility can be packaged as a “Sweet Deal”, that becomes the easy path to follow. However, the future rate increases will effectively be a backdoor tax increase. When those rate increases actually happen, they usually blame Big Water or the state regulator. In reality, if they had fulfilled their responsibility, they should have no excuse for not knowing what was to come. Selling a utility system is seldom in the best interests of the system’s customers. Why should the system’s customers be saddled with large rate increases when lower cost options are available? Especially if those lower cost options would be rejected by taxpayers because the cost out weighs the benefit? Who Pays Versus Who Benefits There can also be an element of “beggar thy neighbor” in a utility sale ( LINK ). New Garden Township is an example. The whole township is benefiting from the sale proceeds. However, only about half of the municipality use the sewer system. That half is paying the full cost of the sale. They are being “beggared” by those with septic tanks. Another good example is the situation with Chester Water Authority, which is covered here: Link

What’s Happening In PA Most residents in the United States obtain their water and wastewater service locally, either with private well and septic systems, or from locally owned and controlled utilities. This is changing, as large investor-owned Big Water companies have recognized they can extract profits by buying up and consolidating small locally owned systems. WE DELIVER $65,000,000 leaves the PA economy annually to fund Big Water Profits. Growth through acquisition is a key component of Big Water's strategy . For these companies, earnings are directly related to investment. Investment in the purchase of a public utility leads to immediate profits. More on the profitability of these Big Water companies. Pennsylvania has become a hot bed for water and wastewater privatization. Two of the largest private for-profit utility companies targeting PA are headquartered near Philadelphia (LINK ). The PA legislature is heavily lobbied by Big Water companies, resulting in the passage of privatization friendly legislation, legislation which favors the growth and profitability of these companies at the expense of the ratepayers (LINK ). For example: #1 - These companies are allowed to extract substantially more profits in PA than in other states they serve. #2 - Currently $65 million/year leaves the PA economy to fund Big Water company profits. The PA Public Utilities Commission consistently favors privatization expansion and rate increases. The PUC will sponsor the required public hearings before an Administrative Law Judge before ruling on a sale or rate increase, but it has routinely overruled the ALJ's recommendation and allowed the utility request. The major driver of the current frenzy of privatization in PA is legislation passed and signed into law by the governor in 2016, Act 12 , the so called “Fair Market” Act. Act 12 should be called the “Predatory Pricing” Act for it allows local municipalities to negotiate an inflated price for its utility, leaving the bill for the rate payer. To understand Act 12 and its impact click here . With the deck stacked against them due to the complicity of the state legislature and the PUC, the ratepayer has little recourse. Although some legislators recognize that privatization does not benefit the ratepayer or the state economy and have introduced legislation beneficial to rate payers, this legislation always dies in committee. The best recourse for rate payers is to recognize when a takeover is threatened, understand the consequences, and pressure local politicians. To do this you will need to understand the Big Water takeover playbook . Then you will need to organize and take action. For help follow this link. What can you do?

The following are links to unpublished pages As of 11-June-2026 there are no hidden pages. #1 The following are links to every website page Listed Alphabetically 2018 Rate Increase - The story of a questionable rate increase by New Garden 2022 rate increase - How Aqua's rate increase impacted New Garden Customers Act 11 - Summary of the tool used to move sewer costs to water customers Act 12 - The PA law that enables inflated sales prices for municipal water and sewer utilities After The Rate Cap - If you are promised a rate cap, what happens when it expires Aqua 2024 Rate Increase - The major issues and outcomes of the rate case Beggar Thy Neighbor - i.e. how to get someone else to pay for what you want Big Picture - Five charts on Act 12 acquisitions Big Water Profits - Big Water profits in PA and other states Bond Option - A ratepayer friendly alternative to a system sale Big Water Biz Profile - A profile of American and Aqua and their businesses in PA BW Growth Strategy - How the corporate parents of Big Water plan to grow their businesses Conflict - A story of legal conflict on interest in New Garden's sewer sale Contact - How to contact Keep Water Affordable - KWA CPLT #1 - PUC complaint details on New Garden use volume in Aqua's 2021 rate case CPLT #2 - PUC complaint details over New Garden sewage trucking in Aqua's 2021 rate case CPLT-Appeal - The appeal of the PUC's complaint denial to the Pennsylvania Commonwealth Court CPLT-AqData#1 - Technical details from Aqua's 2021 rate filing (see CPLT #1, above) CPLT-AqData#2 - Technical stuff on how Aqua's data from CPLT-AqData#1 was consolidated CPLT-AqReply#1 - Summary of Aqua's reply filings to my two complaints CPLT-Exceptions - Summary of actions we took when the PUC's Initial Decision dismissed the complaints CPLT-Hearing Details - What happened at the 11/25/2024 complaint hearing CPLT-Hearing ID - The Initial Decision after the 11/25/2024 hearing denying my complaints CPLT-OpManager - The key piece of evidence in the trucking complaint CPLT-Order - The PUC's final Opinion and Order denying my two complaints CPLT-Validation - Technical stuff validating my consolidation of Aqua New Garden use data CWA Status - Background, timeline and status of the attempt to privatize CWA Directory - This page Econ - The basis for why privatization is a bad deal for ratepayers Falling Apart - A common justification for selling a municipal system - often false Fiasco - The story of a 11/21/2022 official New Garden meeting to explain then recent rate increases For vs non profit - Why an acquisition always results in huge rate increases - it is baked in Governorlttr - An out of date letter to Governor Shapiro about CWA Higher Cost - Why Big Water's claims of lower cost are deceptive Home - Literally the home page for this website Interest - A request for help on who should pay Big Water's interest costs Legislation - Background on PA's Act 11 and Act 12 Links - Literally, links to other websites with related content Municipal Utility - Why local governments should provide water and sewer service NG Rate Cap - The offering and taking away of a ten year rate cap for New Garden's sewer sale NGT Case Study - The story of New Garden selling its sewer system to Aqua Oppose Privatization - Why and how to oppose sale of your municipal water or sewer system PA - A short summary of what is happening in Pennsylvania Pending PA Legislation - Self explanatory Playbook - Big Water's methodology for enticing local governments to sell PUC Complaint - The main page for the two PUC complaints against Aqua PUC Rate Process - Uses Aqua's 2024 rate filing to go through the steps for a typical rate case Rate Increase Needed - A big rate increase needed is usually justification for selling the system Rate Mitigation - How New Garden claimed it would offset big rate increases - but did not Road Map - Typical steps leading to a municipality selling a water or sewer system Sale Review - New Gardens big switcheroo in its promise to review its sewer sale Sample letters - Suggested letters to government officials about repealing Act 12 Search Results - self explanatory Senate Committee - The results of a committee meeting on repealing Act 12 Sewage Trucking - The story behind New Garden trucking sewage from one facility to another Subscribe - Sign up for our mailing list The Basics - Water and sewer service alternatives & why local non-profit benefits ratepayers The Suitcase Of Money - How money drives sale of municipal systems to Big Water Updates - What is new on this website

Pennsylvania Is Important To Big Water Pennsylvania represents the largest customer base for both Essential Utilities (Aqua PA) and American Water (Pennsylvania American Water, PAWC). In fact, for Essential Utilities, Aqua PA is nearly half their business. Combined, they serve over 1.25 million customers in Pennsylvania. Profitability There is a good reason they have a strong presence in Pennsylvania – PROFITS. Pennsylvania is a lucrative place for them to do business. The following charts are Pennsylvania specific. When Big Water companies file with the PUC to increase their rates, they have to provide a lot of financial data. The data for these two charts are from the latest rate increase filings made by Aqua and American. They pretty clearly show how profitable their businesses are. Aqua Pennsylvania Pennsylvania American Water Combined American and Aqua are collecting over $1.5 billion/yr from Pennsylvania ratepayers. Of that revenue, over $660 million/yr is profit – 42% of their total revenue. Think about that, for every dollar a customer pays for water or sewer service 42 cents goes to their profits! Profitability In Pennsylvania Vs Other States We have concerns about Big Water’s profitability in Pennsylvania being significantly higher than in other states. This raises the question of whether Pennsylvania is rewarding Big Water with excessive profits. Apparently those other states provide enough profit to draw and keep their business. The basis for this concern stems from Essential Utilities annual reports from 2014 through 2019. In those reports, Essential highlighted the financial performance of Aqua Pennsylvania. They reported both percent of revenue and percent of net earnings for Aqua Pennsylvania. With that data, you can calculate and compare the financial performance for Aqua Pennsylvania versus the other seven states where Essential does business. The following chart plots the comparison. The Net Margin (net earnings/revenue) for Aqua Pennsylvania is dramatically higher than the average for the other seven states – 37% versus 15%, that is almost 2 1/2 times higher. Something does not seem right about that big of a difference. Return On Equity (ROE) is a key parameter that determines profitability. Could Pennsylvania be awarding a much higher ROE? The answer to that is "No". American Water's August-2023 investor presentation on page 39 compared ROE for the ten states where they operate. The range is narrow, 9.5% - 10.0%. Pennsylvania is at the top of the list, but that does not explain the difference. We cannot explain the difference at this time. Ratepayer Cost Another measure of this disparity is the typical cost for a customer in different states. We gathered rate data from most of the states where Essential Utilities and American Water do business. The two charts that follow plot the annual cost for a customer using 4,000 gallons/month. Clearly, Pennsylvania stands out as being higher than the other states – substantially higher in most cases. And, both Essential and American share the lead in Pennsylvania – they are “essentially” neck and neck. Does Big Water like Pennsylvania? Apparently. At least they are aggressively gobbling up Pennsylvania municipal water and sewer systems to grow their profits. Since the passing of Act 12 (LINK ), Big Water has invested almost $900 million to complete 18 different acquisitions. There are another nine either proposed or in progress totaling over $1.1 billion. Since their profits are a direct percentage of their investment, that makes for very attractive profit growth. And, the regulatory process, makes that investment essentially risk free. A sweet deal if you know how to get it. Why The Disparity The above charts make it pretty clear that Big Water profits are significantly higher in Pennsylvania. And, Big Water's customers are paying for their profits. Why is this? We wish we knew, but, we do not. We find the disparity eye popping. We would really like more insight on this issue. If anyone reading this has knowledge about the difference, we would really like to hear from you. You can contact us at keep water affordable @gmail.com One obvious possibility is that other states limit their utilities to a lower rate of return. But, some very limited data indicates they all do about the same thing. So, we are left scratching our heads. We would appreciate any help you might provide.