Aqua America, Inc. (NYSE: WTR) Chairman and CEO Nicholas DeBenedictis commended the New Jersey Board of Public Utilities today, after it unanimously approved the foundational Distribution System Improvement Charge (DSIC) filing of its New Jersey subsidiary. The approval, which took place yesterday, is the first of its kind for the New Jersey BPU. The BPU commissioners adopted the water infrastructure improvement recovery mechanism in November 2011.
The DSIC encourages utilities to accelerate their much-needed infrastructure improvement programs by allowing water utilities the timely recovery of capital costs, including return on equity and depreciation, for certain capital improvements (including aging pipe, service lines and hydrant rehabilitation) through a bill surcharge, subject to audit, without filing an expensive and lengthy formal rate request.
Aqua New Jersey’s request, filed in July 2012, listed projects and activities the company believes are eligible for recovery through the DSIC over the next two-to-three years. Aqua America Chairman and CEO Nicholas DeBenedictis said, “The BPU is to be commended for joining the list of other states that now employ a water infrastructure surcharge mechanism. One of the reasons we are able to complete the amount of capital improvement projects we do in other states is directly attributable to the DSIC. All one has to do is look at recent headlines about the state of our nation’s drinking water infrastructure to know how badly these improvements need to be made. DSIC programs are a win-win for the company and its customers because it encourages infrastructure investment while reducing the regulatory lag that can slow down important infrastructure projects.”
The Environmental Protection Agency estimates a 20-year capital investment of $334.8 billion is needed for public water system repairs including the replacement of the nation’s transmission pipes, storage and treatment equipment, and other projects required to protect public health. The DSIC will help private water utilities like Aqua New Jersey to address the distribution system improvements cited by EPA.