Aqua and PECO Infrastructure Upgrades: What Do They Mean for Main Liners?
With Aqua's nearly $121 million water pipe revamp and PECO's $80 million natural-gas line project, residents can't help but ask: What does our bottom line look like?
They’re things we don’t think about until we don’t have them. Or when prices go up. Or when platoons of trucks with heavy equipment roll onto our streets and deploy squads of workers to dig through layers of asphalt to install new pipes.
That’s what residents of the Main Line and its western suburbs have experienced for a solid year, since the spring of 2012. Aqua has poured $120.7 million into new water pipes. PECO is investing $80 million in new natural-gas lines. The work stretches from West Chester to Tredyffrin/Easttown to Narberth. The goal is pretty simple: to modernize the infrastructure through which these valuable resources reach homes.
Great. But from where is that natural gas coming? Does it have anything to do with fracking? What do the new pipes mean for our water? And how much will all of this affect our bottom lines? We did some of our own digging, and here’s what we found out.
Continued on page 2 ...
Aqua America’s sleek but nondescript Bryn Mawr headquarters belies its size and scope. Founded in 1886 by a group of Swarthmore College professors, the company now supplies water and wastewater services to about three million people in 10 states. Its chairman, president and CEO, Nicholas DeBenedictis, is an Ardmore resident.
The water in DeBenedictis’ home comes from Aqua Pennsylvania, which serves more than 1.4 million residents in 30 counties. Delaware, Montgomery and Chester counties are part of Aqua’s Southeastern Division. Its water sources include the Crum, Pickering, Brandywine, Perkiomen, Neshaminy, Ridley and Chester creeks, the Schuylkill and Delaware rivers, the Upper Merion Quarry, and a system of wells. From those sources, the water goes through treatment plants, then into pipelines.
Those pipes needed replacing because they were more than 100 years old. “They were typically cast-iron and cement pipes,” says Aqua Pennsylvania president Steve Tagert. “We stopped installing them in 1910, but we still had 150 miles of them in use.”
Tagert says the cast-iron pipes were problem-prone, especially in winter. Many had tuberculation, a build-up of iron oxide that decreases their diameter and reduces the water flow and its pressure. Aqua “retired” those pipes, which means they will remain in the ground. Next to them are the new pipes, which are made of ductile iron with a cement lining. These suckers are almost unbreakable, so water-main issues and other service disruptions should be less frequent.
By April of this year, new pipes will be laid in Montgomery, Delaware and Bucks counties—and rest assured, residents will be happy to see the work finished. Instal-lation caused water stoppage, brown water, detours, parking restrictions, paving and repaving of roads. “Aqua sent out letters saying work would begin on a certain street,” says Donald Cannon, public works director for Lower Merion Township. “But I don’t think people really paid attention until it affected their street. And then it was like, ‘Where’d I put that darn letter?’”
Alas, the letter didn’t explain the complexity or duration of the installation process. But Tagert is happy to oblige. “First, we excavate the street and lay the pipe,” he says. “Then, customers may not see us for a while because we move on to lay the rest of the pipe. We come back and attach each house to the main pipe. Then, we attach that new main at either end.”
Which, unfortunately, requires tearing into the road several times. “In between, we install temporary paving,” says Tagert. “Once the work is done, we overlay the trench and complete it by paving the whole road, or the half of it we had to dig up.”
The pipes were also sanitized before they were put into service—a process visible to residents in the form of water in the streets. “We load the new pipe with chlorine—50 parts per one million,” Tagert explains. “That sits in the pipe for 24 hours, then we flush that and dechlorinate it with sodium bisulfate so it doesn’t enter the water stream.”
To make sure the water is free of bacteria and chloroform, Aqua takes at least two samples, 24 hours apart, to be tested at its labs. Once the water is given the all-clear, the new pipes go into use.
The entire process is repeated water main by water main, neighborhood by neighborhood, township by township, county by county. Laying one or two miles of pipe takes three to four months of on-again, off-again work, Tagert says. “That’s why we do it every 100 years or so.”
Continued on page 3 ...
While Aqua’s big dig may soon be coming to an end, PECO is halfway into a two-year project to upgrade gas lines in Delaware, Chester, Montgomery and Bucks counties, plus and a small part of Lancaster County. PECO is spending $70 million in Southeastern Pennsylvania alone, $9 million of it in Upper Merion, Lower Merion, Tredyffrin/Easttown and Upper Moreland townships, plus Conshohocken.
New pipes are made of either coated steel or plastic, depending on the pressure needed to supply the area. Where possible, a process called “insert-renew” is employed. “Instead of ripping a two-foot-wide trench in your street, we drill a few holes and insert the new pipe inside the old pipe,” says Ronald A. Bradley, PECO’s vice president of gas. “In the absence of a pipe big enough to do insert-renew, we punch a hole in the ground and use a rig that grabs the pipe and drags it through. We make a few drills in front of people’s homes to connect them to the main. Then we gas up the main.”
Like Aqua’s pipes, PECO’s are approaching the 100-year mark. It’s a problem not unique to this area. Utility pipes through-out the country—and certainly in the Northeast—are downright old. In 2009, the American Society of Civil Engineers issued a report card on our infrastructure nationwide. The overall grade was a D; drinking water got a D-, energy a D+.
Does that put anyone in danger? PECO and Aqua say no. “We strictly monitor the quality of drinking water,” Tagert says, “and immediately fix anything that goes wrong.”
The Pennsylvania Department of Environmental Protection confirmed as much in its 2011 Drinking Water Compliance Report. “In 2011, a large majority of Pennsylvanians received water from public water systems that reported no violations of health-based standards,” the report says. “The trend in compliance rates over the last nine years indicates a consistently high compliance rate for health-based standards.”
Bradley says PECO’s natural-gas pipes and electricity grid have an impressive safety record. “It’s just that, at some point, you replace the roof instead of patching it,” he says. “We can’t risk major outages and service interruptions.”
Continued on page 4 ...
Drill, Baby, Drill
There’s another driving force behind PECO’s infrastructure work: natural gas. The company currently has 494,000 natural-gas customers in Southeastern Pennsylvania and is investing an additional $10 million to lay lines for new ones.
That brings us to the F-word: fracking.
Technically known as hydraulic fracturing, it’s the controversial process by which natural gas is extracted from the ground. Pennsylvania has deep caches of natural gas—a lot of it within the Marcellus Shale in northern and western Pennsylvania, a region directly linked to the Main Line and surrounding areas. Seventeen percent of PECO’s natural gas comes from the Marcellus Shale, and that figure could rise to 20 percent.
“The Marcellus Shale is a gamechanger for PECO, our customers and the entire gas industry,” says Bradley. “It’s quite sim-ple: The gas being produced there is less expensive than that from other sources. It’s also likely to stay less expensive because its source is domestic and not subject to international influences.”
Or to environmental influences like the hurricanes that damage the Gulf of Mexico, Texas and Louisiana. “Right now, the vast majority of our natural gas still comes from the Gulf,” Bradley says. “We have gas molecules racing up the pipelines from the Gulf, through the Appalachians and right into our customers’ homes. But now, we’re able to have those molecules joined by gas from the Marcellus Shale.”
Why now? “We have the technology to extract that gas, and that technology is less expensive than it was a few years ago,” Bradley says. “So we, as an industry, can afford to invest in it. Natural gas is a less expensive heating source than oil or propane, and it’s clean energy. That’s why we’re increasing our infrastructure for natural gas.”
Continued on page 5 ...
A lengthy list of organizations has been waging the battle against the alleged environmental harm caused by fracking—in which millions of gallons of chemically treated water and sand are forced underground to break up rock and allow gas to flow. Aqua is tied to fracking in Pennsylvania: It supplies the water used in the process and oversees the wastewater into which fracking’s detritus is disposed. The truth about fracking is slippery science, as both anti- and pro-drilling groups have studies that support their claims. And fracking’s potential for polluting air and water must be weighed against similar risks posed by other fuel sources, like coal and oil.
Environmental concerns aren’t the only issues rankling activists. The business practices of utility companies—particularly Aqua America—have also come under fire. And while the size of their foe may seem overwhelming at times, groups like Food & Water Watch are doing their best.
A nonprofit organization based in Washington, D.C., Food & Water Watch challenges what it calls “corporate control” of natural resources, calling Aqua America a “water profiteer.” “[Aqua America] is voraciously eating up small systems,” its report states. “As Aqua America expands, its customers shoulder rapidly increasing water rates, which bring in heaps of money for the company. Meanwhile, many households are seeing their water bills grow out of their budget, placing extra hardship on families already toiling to keep up with skyrocketing housing costs.”
What some call profiteering, Aqua’s communications director calls running a company. “We are a company, and com-panies seek to make profits,” says Donna Alston. “We’ve invested money back into the infrastructure to make our customers’ water even safer than it is. To that, I will add that we invest in the communities we serve. Nicholas DeBenedictis is a civic and business leader in Southeastern Pennsylvania.”
Continued on page 6 ...
Meet Sonny Popowsky
Aqua Pennsylvania raised its rates in 2008, 2010 and 2012. That latest 4.1-percent hike took effect this past June. It was half what Aqua requested of the Pennsylvania Public Utility Commission.
“What the increase equals per household is an average of $1.99 more per month, but what Aqua requested would’ve equaled an average of $5 per month,” says PUC rep Jennifer Kocher. “The 2010 increase was $2.52; Aqua had requested $5.50.”
The PUC’s job is to ensure that the bumps aren’t just for profit, but also for improvements that benefit customers. They’re called distribution system improvement charges—and there’s more coming. “DSICs have been in place here since the 1990s for water companies, and they’ve been working well to move infrastructure replacements more in line with the actual life span of the pipeline,” says Kocher.
Expenses and surcharges are audited annually by the PUC, Kocher says, and consumer protections are in place.
Sonny Popowsky is also in place. The Consumer Advocate of Pennsylvania since 1990, Popowsky represents and negotiates on behalf of Pennsylvanians when a utility company files a case to increase its charges. And while he says it’s true that Aqua’s rates have steadily increased, so have those of all water companies in Pennsylvania. “Utilities very rarely get everything they ask for, and they very rarely get nothing,” he says. “They have a right to make money. But we try to make sure that they don’t take it to excess.”
PECO, on the other hand, went 20 years without a base increase. The most recent bump was in 2010 for electric (up an average of $5 a month) and natural gas (up an average of $4.41). “Right now, natural gas is at an all-time low,” says Popowsky. “And the reason is the Marcellus Shale.”
And all gas companies, including PECO, pass the cost of gas on to the customer “dollar for dollar,” Popowsky says.
If PECO seems unconcerned about competition from other suppliers, it’s because they make their money on distribution. That’s why DSICs continue to rise.
In 1996 and 1999, laws were passed opening the gas and electric industries to competition. By 2011, competitive market rates had been introduced. “And though it’s been several years,” says Popowsky, “I worry that homeowners aren’t getting the message about this.”
PECO’s competitors are the ones calling at dinnertime and sending unsolicited mail. But if you grit your teeth and listen to their spiel, you could save money. “Many of them offer lower rates and/or the option to lock in lower rates for three to six months at a time,” says Popowsky.
Still, no matter the energy provider, PECO is in charge of distribution. “Basically, the gas and electricity you get in your home will be the same that your neighbor gets, but you can pay less money for it,” Popowsky says. “Now that PECO is providing new pipes for natural gas, homeowners and business owners can get that, too. It’s competition. It’s great.”
Millions have taken Popowsky’s advice. The PUC reports that, as of December 2012, more than 1,964,140 customers had switched from PECO to other electricity suppliers, and more than 400,000 natural-gas customers did the same.
But when it comes to water, there is no choice—short of digging your own well. “Aqua doesn’t have competition,” says
Popowsky. “Not yet. Someday … I hope.”