Tidewater asks for statewide water-rate increase

Tidewater Utilities Inc. has filed an application with the Public Service Commission to raise water rates for all customers in Delaware by nearly 30 percent.

Tidewater, with its subsidiary Southern Shores, provides water services to about 32,700 customers in more than 300 residential communities and commercial establishments, including many towns and communities in eastern Sussex County.

Tidewater is seeking a general increase in annual operating expenses of just over $6.8 million or about 29.4 percent of its current rates. The company has also requested that the Public Service Commission allow an interim rate increase of 10.49 percent effective Nov. 15. Tidewater has offered to put the interim rate increases under bond, which would cover any refund if the PSC does not approve rate changes.

The PSC has scheduled one public comment session for each county. Sussex County customers will have their say Wednesday, Jan. 18, 2012, at Delaware Technical Community College in Georgetown.

The increase has been met with dismay in the Cape Region.

“We have to mount an effort that would allow us to tell the Public Service Commission why we think double-digit rate increases are too high, too soon,” said Plantations resident Bob Costas.

The company last increased water rates in 2009, when it asked for a 32.5 percent increase and settled for 14.9 percent.

Henlopen Landing resident Bob Steinback sees constant increases as a sign of bad business practices.

“Large double-digit increases in normal businesses are a sign of a poorly run business with a need for better management,” he said.

In addition to rate increases, Tidewater is also planning to incorporate an inclining-block rate structure that would offer three different rates depending on how much water is used. Currently, residential customers pay a flat rate of $6.78 per thousand gallons. If approved, those who use 0 to 5,000 gallons will be charged $8.61; 5,001 to 20,000 gallons will see an $8.83 charge and anyone using more than 20,000 gallons will pay $9.06.

Tidewater is also asking to increase rates for facilities charges, public fire hydrant district charges, private fire hydrant district charges, service connection charges and bulk water contract sales.

Steinback, who along with Costas fought the increases in 2009, said he believes utility companies ask for increases higher than what they actually need.

“It appears to me utility rate increases in the state of Delaware are a game,” he said. “Utility companies ask for two or three times what they need, and the PSC cuts that request in half and the public ends up paying more than they should have to.”

As a way to better regulate rate increases, the state legislature would have to pass a prudence standard bill. The regulation would give the PSC more power to scrutinize each rate increase request, which could cut the rate changes lower.

Such a bill was introduced to the General Assembly in 2009, but stricken from the record in 2010. House Majority Leader Pete Schwartzkopf introduced a similar bill - HB 228 - just before General Assembly went on recess in June. The issue will be tackled by the legislature when it returns to session in January.

In a letter to the editor printed in the July 2, 2010 edition of the Cape Gazette, Tidewater President Gerard Esposito said his company would support a prudence standard bill. Esposito could not be reached for comment.