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Aqua America Keeps Chugging Along

Since they are strapped do you think you will end up picking up some of those businesses?

DeBenedictis: Well, we would hope. The 15% of the market which is private, that probably is our domain. There is probably nobody else who wants that piece. 30,000 of them and a lot of small ones. We do about 25 acquisitions a year. We've done 250 in the last ten years and that adds about 2 to 3 percent normal growth, another percent from just normal people growing, the population growing in states like Texas, North Carolina, and so on, Virginia. And then the rest comes from pricing.

By investing in the system, the regulators allow us to earn on that investment. And with the stock trading at two and a half times book [value], you've got the natural leverage of the leverage.

You've gotten involved in the natural gas drilling with the fracking in Pennsylvania. Do you feel there's any conflict of interest there because there's a lot of pollution involved with that water, but yet you are also providing clean water?

DeBenedictis: Well, it is such a small piece of our business although it's expanding. Believe me, we're not going to do anything to hurt core business which is drinking water. We've tested and tested. We've had laws in Pennsylvania now which are probably the strictest in the country, although the environmentalists are not going to admit that yet because they are trying to stop the drilling.

But triple casing, no drilling within a certain feet, I think it's 300 feet, of a well, no more taking the frack fluids of the site and putting them into water treatment plants. So I am very pleased that it can be done right in Pennsylvania.

Let's talk about Florida. There's been some complaints in Florida, specifically the Palm Beach area. What is your comment on that?

DeBenedictis: Well, first of all its 3% of our revenue. So I don't want to overstate Florida's importance to whole portfolio. We're in 13 states. Florida -- we bought troubled companies from the old Florida Water Co., which was part of an electric company. They dismantled their operation there. We had to fix everything because they hadn't kept it up.

When you fix things, you have to raise prices. We raised the prices and a lot of the people are seniors complaining and so on. I think we've stabilized now. We are making a profit in Florida. We just got awarded a rate case and we're in there for the long term.

So I think we're making people understand that we're going to give them good service and good water, but it was a shock because this other company had kept the prices down by not doing anything, so people are paying maybe a buck and a half a day for water. They'll pay that for a pint of water at the store.
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