As a regulated water utility, there are two ways Aqua’s water and wastewater rates are set. First, they can be approved by the Public Utilities Commission of Ohio (PUCO). The PUCO would only accept rate increases that support significant improvements and repairs needed to the system. Before setting rates, the PUCO follows a process in which the public has an opportunity to have its voice heard, and we believe that’s a good thing for everyone.
Second, customer rates can be set through local negotiations between Aqua Ohio and the elected officials representing customers in the area served. This method affords local elected officials a more active role in establishing priorities and setting rates that will support reliable operations and critical investment in facilities.
Our rates are based on the true cost of service, such as building and improving the infrastructure that enables Aqua to deliver high-quality drinking water. Across the country, our customers pay about a penny a gallon for drinking water.
1. Rates are set by the government, whether local elected representatives or a state agency not the regulated utility.
When rates are locally negotiated, local government officials help to determine an appropriate level of rates for water services as well as priorities for investment. After an agreement between the officials and the company is reached, the officials pass ordinances to approve implementation of the rate plan.
Alternatively, rates can be set by the Public Utilities Commission of Ohio (PUCO). The PUCO assures that water systems owned by regulated utilities meet all requirements and that rates are both just and reasonable.
Local officials have the prerogative to negotiate rates with the company or differ the rate setting process to the PUCO.
Regulated water companies never set their own rates.
2. Rates are based on the total cost of service and investments and have to be justified by the water company.
Rates are set based on the total cost of running the water system. Factors that affect costs include capital investment, water source, service area density, and water treatment needs. Under Aqua’s proposal, water treatment would continue to be supplied by the Mahoning Valley Sanitary District. Water companies like Aqua Ohio cannot and do not increase rates without municipal agreement or public input and utility commission approval.
If the regulated operator would like to raise rates, it must provide documentation to the utilities commission to prove that the increase is necessary. Rate increases typically occur to cover the costs of infrastructure investment. These investments may include replacing water mains, hydrants, tanks and updating and maintaining water treatment facilities.
Once the utilities commission has evaluated a rate request and considers public input it makes a final ruling, granting, adjusting or denying a rate request as it sees fit.
3. There is more oversight of rates for regulated companies like Aqua than for publicly owned systems like those run by municipalities.
Regulated water systems must go through the public rate case process to prove its costs are justified and its rates are fair. The rate case process requires the release of supporting documentation, and open public hearings to allow customers, elected officials and other stakeholders to voice their concerns.
4. Working with Aqua won’t cause your rates to increase because other entities dictate rates.
Your water rates won’t go up just because Aqua is operating your system. Operators like Aqua Ohio have strong incentives to operate as efficiently as possible. The main driver of rate increases is investment to improve or maintain the infrastructure needed to provide better and more reliable service, and rate increases are always decided with significant public input.