T Reeder, NCDEQ and D Fountain, Duke Energy Letter - HB630_20170104

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Shannon V. Becker, President
0:919.653.5770 • F:919.460.1788 • [e-mail]
January 4, 2017
Mr. Thomas A. Reeder
Assistant Secretary for the Environment
N.C. Department of Environmental Quality
1634 Mail Service Center
Raleigh, N.C. 27699-1634
Mr. David B. Fountain
North Carolina State President
Duke Energy
410 South Wilmington Street
Raleigh, NC 27602
Dear Mr. Reeder and Mr. Fountain:
I write on behalf of Aqua North Carolina, Inc.'s ("Aqua") customers who are impacted by
House Bill 630 ("HB 630") and by actions to be taken thereunder. That statute addresses
service options for various well owners who are within certain proximity of Duke Energy
("Duke") ash ponds. As you know, Aqua, a public water and wastewater utility regulated by
the North Carolina Utilities Commission ("NCUC"), owns and provides water utility service
to the public from three wells that are within the specified proximity of Duke's Allen plant,
near the City of Belmont ("Belmont").
Aqua has reviewed the proposal submitted by Duke to the North Carolina Department of
Environmental Quality ("NCDEQ") on December 7, 2016 and respectfully submits that
additional critical details and facts are required to determine both the full nature of the
proposed options, as well as the incremental costs for Aqua and/or its customers under
those options. In order for all parties to have a sound basis for decision and action going
forward, Aqua, Duke, Belmont and NCDEQ must work together to thoroughly examine and
price the options. All parties need more clarity about the technical issues involved in each
proposal, as well as an assessment of and a fair allocation of costs. Aqua's primary interest
is in a result that protects our customers' interests, both with respect to service and to the
cost for the water they consume --- near -term and ongoing. Similarly, we also seek to
protect our shareholders from the financial impact of any solution.
202 MacKenan Court, Cary, NC 27511 • AquaAmerica.com

By way of background, Aqua is a regulated public utility that owns and operates more than
700 well -based community water systems in 51 counties throughout the state. Three of
these wells are located within one-half mile of the Allen Steam Station coal ash basin in
Belmont and thus come within the purview of the provisions of HB 630. These three wells
serve two separate public water supply systems: Heather Glen/Highland on the Point
(PWSID # 01-36-255) and Southpointe Landing (PWSID #01-36-192). Like all others whom
HB 630 was intended to protect, Aqua is a well owner, but with one significant difference:
our three wells are high -production community wells that serve 80 residences, or almost
250 people, within this established compliance boundary. Our customers are well aware of
this issue and have keen interest in its resolution. Aqua is, therefore, the voice of all of
these citizens and must ensure the terms of the proposed solution are also in their best
interest. This is particularly important inasmuch as, in a regulated utility environment,
necessarily incurred costs are passed along to ratepayers.
Duke and Aqua have been in regular contact over the last few months to discuss the
viability and challenges related to the various options available for Duke's proposal. These
options included filtration or relocation of wells, as well as an interconnection to Belmont.
Duke's December 7 proposal, however, includes only the recommendation to interconnect
to Belmont. Three concerns arise: (a) Aqua would be left to the uncertain negotiation with
Belmont; (b) there is no clear understanding of the resultant incremental costs; and (c)
there is no clear understanding how any incremental costs to Aqua and its customers
would be recovered or mitigated. Although an interconnection to the city may be a viable
solution, Aqua submits that Duke, Aqua and Belmont should meet ---along with NCDEQ
representatives ---to more fully develop the facts necessary for all parties to come to an
informed agreement, upon which NCDEQ could then make a sound, fully informed
decision. Specific areas requiring additional information include, but are not limited to, the
following:
Water Rates — Under Duke's proposal to Aqua, Aqua would be required to purchase
water from the City of Belmont and pass through the sum of charges for purchased
water required to serve the customers within the two affected systems. These systems
are located outside of Belmont's city limits and, therefore, Aqua anticipates it would be
billed Belmont's "Outside City Limit" volumetric water rates. If so, this would result in
Aqua's customers potentially incurring a considerably higher monthly water bill. It is
unknown how or if Duke would address the ongoing difference between Aqua's tariff
rates and Belmont's purchased water costs, which would be charged to Aqua to service
the customers in its two affected systems.
2. Retired Rate Base — Interconnection with Belmont would require Aqua to abandon and
write off the value of the three water -producing wells and appurtenances, currently
used to serve these customers. It is unknown how or if Duke plans to reimburse Aqua
for this loss.
Duke's proposal generally refers to financial supplements being considered for ongoing
filter maintenance and "new" water bills. Aqua requests clarification regarding whether
consideration will be offered exclusively to individual household well owners or to all
affected parties, including Aqua and its customers. Aqua seeks a viable solution that will
not impose any incremental financial burden to its customers or its shareholders.
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In conclusion, we request a continuation of the collaborative discussions that we have had
with Duke, expanded to include Belmont and NCDEQ, prior to any decision by NCDEQ on
the current proposal.
Sincerely,
Shannon V. Becker
President
Aqua North Carolina, Inc.
cc: Richard S. Fox, Aqua America, Inc., Executive Vice President and Chief Operating
Officer, Regulated Operations
Chuck Flowers, City of Belmont, Director of Public Works
Martha Thompson, Duke Energy District Manager, Charlotte
Jessica Bednarcik, Duke Energy Project Manager, Carolinas, Permanent Water
Line Project
Christopher J. Ayers, Executive Director, Public Staff
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