Aqua Virginia offered to buy the beleaguered King George County Service Authority for $26.1 million, but King George officials said it was an offer they could refuse.

“The price offered was too low, given what we believe the authority is worth,” said Mike Bennett, chairman of the authority’s Board of Directors. “It was less than the amount our insurance company covers.”

In addition, Bennett told the audience at Tuesday’s meeting that the Service Authority has a plan to meet the financial challenges caused by aging systems and more stringent state and federal requirements. The Service Authority recently restructured its debt, which totals about $32 million.

The restructuring allowed it to establish a $15 million line of credit, which the Service Authority will tap into as it prepares to replace the wastewater treatment plant at Purkin’s Corner and mend other problems.

Bennett also said the authority and county both would lose control over billing, which might mean even higher rates for customers.

“The offer expressly said that there was no guarantee made about future rates,” he read from prepared notes.

Aqua Virginia submitted the proposal to bring its “scale and expertise as a utility provider,” said Dan Lockwood, a communications manager with Aqua.

“Overall, when Aqua partners with communities across the state and throughout the country, we focus on effective utility operation by being efficient and reducing costs,” he wrote in an email. “Our company’s size provides us with purchasing power, and we use those economies of scale to increase efficiency.”

Aqua Virginia is a subsidiary of Aqua America, the second-largest publicly traded water utility based in the United States—and a private company that is positioning itself for even more growth.

Its Pennsylvania subsidiary recently signed an agreement to purchase the Delaware County Regional Water Quality Control Authority for $276.5 million. The transaction was one of seven pending this year; Aqua America currently has more 3 million customers in states from New Jersey to Texas.

Aqua Virginia operates a water and sewer system at Presidential Lakes in King George and serves almost 3,000 homes in four major subdivisions in Caroline County: Lake Land ’Or, Lake Caroline, Elsinore and Campbell’s Creek.

Its attempts to raise rates in Caroline County last year drew the wrath of both customers and county officials. At an April 2018 hearing held by the State Corporation Commission, Caroline Supervisor Jeff Black said he was commenting on his own behalf, not the board’s. He said that residents in western Caroline could see their rates increase 240 percent since the early 2000s if the hike was approved, and described the rising salaries of Aqua’s management as examples of “corporate greed.”

The King George Service Authority didn’t initiate the contact; Aqua reached out to King George in August. The authority formed a working group to look into the proposal as its regulations dictate, and General Manager Jonathon Weakley submitted the group’s recommendations to the directors. They voted 5–0 to reject the offer.

There was speculation last year that Aqua was interested in purchasing the Service Authority after an Aqua official served as the Service Authority’s interim general manager from July to November. Dan Hingley, Aqua’s operations manager, stepped in temporarily after a former general manager resigned amid controversy. The authority repeatedly had violated state regulations and been fined, but the former general manager hadn’t disclosed any of the problems.

When Hingley took over, he cited numerous operational problems and dilapidated facilities that hadn’t been maintained, even though replacement parts for some broken items had been ordered—and in some cases were still in their original boxes.

Aqua demonstrated its ability “to be efficient, solve problems and control costs” during the interim operation, Lockwood said.

The situation is different these days, Bennett said. He’s cited “the steady hand” Weakley has brought to the authority, allowing the utility to get a better grip on its short- and long-term needs and get into compliance with state and federal regulations.

“In other words, we don’t need to sell,” Bennett said.

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Cathy Dyson: 540/374-5425

cdyson@freelancestar.com

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