Clean Water for NC’s report on water privatization in North Carolina

Annual reports for Aqua America2008200920102011

A list of Aqua NC’s environmental violations

A presentation by Aqua America CEO Nicholas DeBenedictis to a water industry investor conference, delivered Dec. 6, 2012

Editor’s note: This is the second story in a three-part series about Aqua North Carolina. The first story addressed Aqua NC’s potential sale of water to the controversial 751 South development. Next week we’ll examine the cost of Aqua NC water.

Tell us your experience with Aqua NC by posting a comment below.

At Juli Williams’ house, you have just three seconds to wet your toothbrush. A shower can last no more than 10 minutes. The dishwasher may be operated only with permission.

Even with these austerity measures, Williams’ monthly water and sewer bill runs as high as $423, more than most car payments. And for that money, Williams says, the bathtub is stained brown from water that comes from community wells operated by Aqua North Carolina.

“Our neighborhood has been fighting Aqua for years,” says Williams, who lives with her husband and three children in Mallard Crossing, a 200-home subdivision in eastern Wake County.

Aqua North Carolina, which owns 800 water and/or sewer systems statewide, is a subsidiary of one of the nation’s largest private water utilities, Aqua America. While the company touts its “well-deserved reputation for rehabilitating water and wastewater facilities” to meet its “high performance standards,” many of its North Carolina customers dispute that claim.

They have complained to the company and to state environmental and utilities officials about poor water quality, dry wells, high rates and subpar customer service. They have vented on message boards and signed petitions protesting Aqua’s business practices.

Privately owned water utilities such as Aqua are proliferating. An estimated 69 percent of public water systemsthose that furnish water to at least 25 customersin the U.S. are privately owned. A confluence of events has nurtured the growth of private ownership: Failing public infrastructure (the Environmental Protection Agency estimates $335 billion is needed to fix pipes and systems nationwide), government budget shortfalls, incentives from state utilities commissions, and private companies’ deals with developers to provide service to sprawling suburban communities.

Unlike publicly owned utilities, such as those operated by cities and towns, private companies aren’t held to high levels of transparency. Consumers can’t follow the money. And with profit as a motive, these private companies, some customers and policy analysts say, favor the shareholders over the public good.

Tom Roberts, president of Aqua NC, says shareholders reap the benefits of a well-run company that prioritizes its customers. “If you put the customer first, everything works out,” he says. “If I provide quality water and service at reasonable prices, at the end of the day everybody is satisfied.”

Count Juli Williams among the dissatisfied.

“They’re gouging us,” she says. “The world needs to know about Aqua.”

Aqua America’s 2011 annual report includes a photograph of a sink full of sudsy, clean waternot the brown, sediment-flecked liquid that often flows from Tony DeLuca’s faucet.

DeLuca has lived for seven years in Robin’s Wood, a rural subdivision west of Chapel Hill. Here, the homes are painted in muted earth tones, which often match the color of the water.

“Growing up, I never had brown, dirty water,” DeLuca says. “Here, it happens frequently.”

Iron is prevalent and naturally occurring in North Carolina groundwater. Municipal utilities, such as Durham’s, filter out much of the iron during treatment process. But from Mint Hill in southwestern North Carolina to Chapel Hill to Cary to Raleigh, Aqua customers, most of whom are on community wells, have complained that they don’t want to wash their clothes, their dishes or themselves in brown, dirty water.

While not known to be harmful to human health, iron-laden water nonetheless can stain tubs, sinks and clothing. The EPA suggests limits on iron levels in drinking water, but they are just thatsuggestions, and not legally enforceable.

“Our water meets regulations, but we have naturally occurring materials in North Carolina like iron and manganese that cause discolored water,” says Roberts of Aqua NC. “We prioritize those and try to address them as we can.”

Last month, brown water flowed from the kitchen faucet at the home of Amy Nammack-Weiss, who also lives in Robin’s Wood. “It’s happening more often,” she says, adding that in December a black-purple residue had settled in her bathtub.

As recently as Jan. 1, brown water poured into her clothes washer. Nammack-Weiss says an Aqua service man came out that afternoon and flushed the line by running water from her hosewater usage she will be charged for.

“[The service man] says the system is old and needs to be upgraded,” Nammack-Weiss tells INDY Week via email. “He says if enough people call, Aqua will do something.”

Iron may be a nuisance, but toxic substances have been detected above legal limits in the water of Aqua NC customers in the 16-county Raleigh region over the last seven years, according to N.C. Department of Environment and Natural Resources (DENR) records.

Among them are lead, copper, ethylene dibromidea probable carcinogen used in gasoline mixturesand TCE, a solvent also known as trichloroethylene that likely causes cancer, according to the EPA.

Since 2005, there have been at least 170 instances in which Aqua NC water did not comply with state or federal laws regarding contamination levels, monitoring and public notification of violations in the Raleigh region, the records show.

From 2008–2012, DENR issued only seven administrative penaltiessome of which covered multiple water violationsand fined Aqua just $650.

Linda Raynor, head of DENR’s compliance services in the Public Water Supply branch, says Aqua has corrected its violations. For its size, she says, Aqua does “a pretty good job in North Carolina. They have taken over some bad player water systems. They have over 800 systems they take care of. They don’t have a lot of compliance issues.”

Residents in Fuquay-Varina’s Northgate community would likely disagree. According to a report by Clean Water for North Carolina, although the housing development is close to the town’s public water connection, the developer donated a single lot to a private company, Heater Utilities (now owned by Aqua NC), to drill a community well for 30 homes.

But the lot where the well was drilled, the report goes on, lay adjacent to a contaminated site that had been documented by state environmental officials more than 30 years ago.

TCE, which is often used as a degreaser for metal, was detected in well water distributed to Northgate residents. Even after Aqua purchased Heater, TCE levels continued to rise. In 2005, Aqua notified Northgate customers and installed a filter to remove the solvent. After six months, the TCE levels increased again, which, according to Clean Water for North Carolina, indicated the filter needed to be replaced; it didn’t happen until 2007.

This failure and similar ones in other North Carolina communities contradict a recent statement by Aqua America President Nicholas DeBenedictis. He wrote to shareholders in November 2012 that “water quality and service reliability have always been at the top of Aqua America’s priority list.”

In that shareholder statement, DeBenedictis extolled the $262.8 million in system upgrades and pipe replacements the company made nationwide in the first nine months of 2012.

However, Katie Hicks of Clean Water for North Carolina, a critic of Aqua NC, contends the company is slow to upgrade its systems. “Aqua is getting fixer-uppers and doesn’t start with very good water quality, but they’re not fixing the problem quickly after acquiring them,” she says. Moreover, the cost of those upgrades are distributed across all customers, meaning communities whose systems require minimal maintenance are paying for those like Northgate and Robin’s Wood that need significant attention.

At Robin’s Wood, DeLuca and other neighbors say they have regularly experienced water quality problems, despite repeatedly calling the customer service department.

However, Roberts defends the company’s customer service record, noting that Aqua NC serves 250,000 customers but only 25 customer service complaints were filed with the N.C. Utilities Commission during the last rate case. “I think we do a pretty good job on customer service,” Roberts says.

Yet complaints to the utilities commission aren’t necessarily the best measure of the company’s service record. Many people don’t know the utilities commission exists or that customers can lodge complaints with it.

Instead, customers call the company’s service line, which DeLuca did several times in July after his water was discolored and the pressure was low. “Aqua said someone would come out. Then I’d call back and they’d say the same thing,” DeLuca says. “I got the runaround with no concrete details.”

After nearly two days, DeLuca emailed the company’s CEO and vice president. “Within an hour I got a call from the North Carolina regional manager telling me what’s going on, that there was a leak somewhere.” And only after DeLuca filed a complaint with the utilities commission did Aqua NC fix a pipe in front of his house.

“They’re a horrible company,” DeLuca adds. “They care about what’s in their wallet.”

Who is Aqua North Carolina?

• Aqua North Carolina is a subsidiary of Aqua America, a for-profit corporation headquartered in Bryn Mawr, Pa. Aqua NC entered the Triangle in 2004 after purchasing the Cary-based private water company Heater Utilities.

• Aqua NC’s president and CEO is Tom Roberts, who lives in Cary. The company provides water and/or wastewater service to more than 250,000 customers in 53 counties, including Chatham, Durham, Orange and Wake.

• Most of Aqua NC’s customers live in subdivisions that lie outside city water service areas.CountyNumber of subdivisions served by Aqua NC Chatham 17 Durham 18 Orange 13 Wake 404

• Aqua America serves more than 2.5 million people in 10 states. In terms of market value, Aqua America is the second-largest publicly traded utility in the U.S. In 2011, the company generated $712 million in revenues, according to its annual report.

• Aqua America CEO Nicholas DeBenedictis earns $600,000 annually, but including stock awards, pensions and other percs, his compensation package totals $4.1 million, according to financial media reports.

• To see Aqua NC’s service area, visit Aqua America’s website and click on “Our States” / “North Carolina.”

This article appeared in print with the headline “Dirty and expensive.”