TRINITY — Aloha Utilities claims to be holding $375,000 that was supposed to remain in an escrow account until state regulators could decide whether the money should go to former customers or to utility stockholders.
In a lawsuit filed Friday, the company says the disputed money was in the escrow account until March 23, but since then "the monies here at issue are maintained in a separate and segregated account of Aloha in Pasco County."
That revelation sent the Public Service Commission scrambling to find out how the funds were moved without its blessing, and sparked outrage from state Sen. Mike Fasano, who is calling for the Florida Department of Financial Services and possibly Attorney General Bill McCollum to investigate.
"I think some laws were broken," Fasano said. He said the PSC was confident that no one from its agency signed off on releasing the money to Aloha.
PSC spokeswoman Cindy Muir said the PSC clerk is supposed to sign off when money is released, but no paperwork has been found. The dispute over the money in escrow was set to appear on the PSC docket soon.
"This is absolutely appalling," said Wayne Forehand, a former Aloha customer and an outspoken critic.
A March 20 letter from the PSC regarding the fund is addressed to the Holiday branch of AmSouth Bank of Florida. AmSouth merged with Regions Bank in 2006, according to Regions' Web site.
Fasano said the bank should be "totally responsible" for reimbursing that money to 25,000 former Aloha customers in the Seven Springs and Trinity area.
Officials with the Alabama-headquartered Regions Bank could not be reached for comment Monday.
Aloha's lawyers also could not be reached for comment. However, they say in the lawsuit that they will seek a court order to have the money deposited into the court registry until a judge can decide who should get it.
Aloha says the PSC has no jurisdiction over what happens with the money, and that Aloha ceased being a utility from the moment its assets were transferred to the Florida Governmental Utility Authority, the agency that bought Aloha's water and wastewater system last month for $90.5-million.
The fight over the escrow money has been an issue ever since.
The company's shareholders say that the escrow money is theirs and they want state regulators to release it.
Customers and their representative say that's their refund money from 2002-03.
Here's how the money ended up in the escrow account:
In March 2006, Aloha and representatives of its 25,000 customers in the Seven Springs and Trinity area entered into a settlement agreement to resolve a number of outstanding issues.
One of those issues: Aloha's appeal of a 2004 commission order to refund nearly $300,000 to customers who had been paying temporary rate hikes that were ultimately not approved.
As part of the 2006 settlement, Aloha agreed to drop its appeal of the rate case and put the refund money into an interest-bearing account to help pay for an "anion exchange" treatment system intended to solve long-standing water quality problems.
The agreement says that once a third series of rate increases to pay for the system got approved, Aloha could record the escrow money as its contribution to the construction, and then the money would be released to the utility.
The treatment system never got built, of course. And when the Florida Governmental Utility Authority bought Aloha's assets this year, that group scrapped the anion exchange treatment system, saying it had other plans for improving the water quality.
Lawyers for Aloha say that since the treatment system was abandoned, Aloha should get the escrow money, in part to defray what it had spent already on plans for the system. The company also says it would use the money to finish paying off PSC fees and fines as well as Pasco County for work it did at Aloha's request.
Lawyers for Aloha estimate the company spent roughly $1 million on the plans and is legally entitled to the money.
Not so, say customers and Stephen Reilly, a lawyer from the Office of Public Counsel working on their behalf.
Reilly wrote in filings to the commission that customers agreed that Aloha would get the money only if and when construction of the treatment system was finished.
He wrote that Aloha's investment "will be fully compensated" by the $90.5 million sales price.
Lisa Buie can be reached at firstname.lastname@example.org or (813) 909-4604.