RELAC Meeting Notes

Notes on RELAC meeting at RA, March 22, 2010

The Reston Association hosted a public meeting on Monday evening, March 22nd 2010, to give RELAC customers an opportunity to meet with staff of the Fairfax County department which deals with utilities and cable companies to discuss the proposed RELAC rate increase. The county staff participating in the meeting are attorneys and utility specialists with considerable experience (though not experienced on district A/C, which is highly unusual) and their names and contact information have been posted on this blog. Please feel free to contact them direct to express any views you have regarding the RELAC rate increase.

As you know, several months ago Aqua Virginia filed a rate increase proposal with the State Corporation Commission in Richmond, which regulates utilities in Virginia. The average increase Aqua is asking for RELAC customers is about 56% over existing tariffs, which have not been changed since Aqua bought the company. The documents filed with the SCC indicate that RELAC is steadily losing money and a significant increase is needed to keep RELAC solvent. We were aware of their intent to file for an increase, as the General Manager of Aqua VA, Greg O'Dell, had met several times with a group of affected cluster presidents during the past year and mentioned that they were planning to request a “long overdue” rate increase.

At last Monday’s meeting, County staff explained that they were asked to become engaged in this case in response to concerns expressed by residents on the RELAC system. They have reviewed the materials provided by Aqua as part of the filing, and will be going to Richmond to participate in the April 20 hearing in front of an SCC examiner, and will present the County's views on the requested increase. The County has also arranged with the SCC to hold a second hearing in northern Virginia for the convenience of residents unable to go to Richmond. That meeting will be on the evening of May 3 at 7pm in the Fairfax Count Govt. Center. The Commissioners will review the transcripts of the two hearings prior to making their decision: in other words, the Richmond meeting is not “more important” than the Fairfax meeting and no decision will be made until after both have taken place and all oral and written comments have been reviewed. Aqua's management will only be present at the Richmond hearing, so anyone who is anxious to hear them in person would need to travel to Richmond. Speakers at the Richmond meeting will be under oath, and the County attorney will have the ability to cross-examine Aqua’s team in Richmond.

Based on their analysis of the RELAC accounts, the County staff feel that a slightly lower increase would be justified, since there were a couple of items included by Aqua in the rate calculation which the staff believe should not be included. However, the difference is actually quite small, and the bottom line is that County staff currently believe that RELAC will not be financially viable without a significant increase in revenues. Their analysis does not address the question why Aqua didn't apply for smaller increases before they got into such a deep hole, but simply arises from analysis of operating costs and revenues reported by Aqua.

A number of points were raised after the County staff had completed their explanation, on topics such as the future viability of RELAC, the possiblity of conversion to geothermal cooling, Aqua’s stated desire to sell RELAC in order to get out of the A/C business, asking RA to allow pilot projects to test alternatives, whether shortcomings in RELAC service are inherent in the nature of the system or due to poor maintenance by homeowners, etc. On most of these the County staff had no answers, but urged citizens to express their concerns on the record so that the SCC commissioners have a clear picture of the views of consumers before they rule on a rate increase. Dick Kennedy of Waterview Cluster asked whether service standards could be better defined and enforced, since much of the debate about RELAC is between people satisfied with present cooling service and others who are not, without much data available to inform the debate. The tariff as presently worded is not very clear on the definition of acceptable service (whether water temperature is measured at the plant or at the home, how much flow is required in order to provide adequate cooling, etc.). The County staff answered that this would be an important topic to raise for the commissioners.

In my view, this is probably the most important point coming out of Monday’s meeting: We can’t expect the SCC to engage on topics such as geothermal alternatives or to help Aqua look for a potential buyer. But we could reasonably request them to sharpen the definition of “acceptable service,” and to direct Aqua to introduce a monitoring program which establishes whether this regulated utility is meeting its legal obligation as a precondition for any rate increases.
-Fred Schwartzendruber