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Aloha Utilities returns disputed sum to escrow account

TRINITY — The money that Aloha Utilities removed last month from an escrow account without approval from state officials is back where it came from.

An aide to state Sen. Mike Fasano confirmed Friday that the money had been wired to the bank. Fasano, a former customer of Aloha, was outraged when Aloha revealed in a lawsuit filed last week that it had assumed possession of nearly $375,000 that remained after the private water company sold its assets to the Florida Governmental Utility Authority for $90.5 million.

The utility's 25,000 former customers in the Trinity and Seven Springs areas claimed the money represented earlier refunds and should be returned to them. Aloha said the money belonged to the company.

The Florida Public Service Commission was set to sort out who gets what. In the meantime, the money was sitting in an escrow account at a Regions Bank branch in Holiday.

Then on March 27, Aloha sued the PSC, saying it had no authority to decide the matter. The company asked a judge to hear the case and in its lawsuit revealed that it had the money. The company also asked the judge to order that the money be placed into the court registry until the case could be heard.

The news angered former customers. Fasano wrote letters to state chief financial officer Alex Sink and state Attorney General Bill McCollum asking for an investigation into how Aloha obtained the money without the PSC's approval.

Aloha's attorney said this week that the company did nothing wrong and that recent bank bailout laws had done away with the two-party check rule for such accounts.

Fasano said even if a loophole exists, the bank should have notified the PSC because it is a government agency. "We're glad the dollars are back," said Fasano, who still wants an investigation. "It's sad that customers had to go to extremes in order to get back what are the customers' dollars."

Wayne Forehand, a former customer and vocal critic, said such behavior was typical of Aloha.

"Isn't this the most amazing thing you've ever heard? Aloha has been so greedy all these years and they were paid a premium to get out of here. They got so rich, but they couldn't be happy with the $90.5 million."

Attorneys for Aloha could not be reached Friday.

It also was unclear whether the same money was being moved back into escrow or the bank or another party had reimbursed the account.

Fasano said Aloha should also be responsible for repaying any interest the money would have received had it remained in escrow.

Bank spokesman Tim Dayton said laws prohibit him from commenting on client transactions, but bank officials had been "working to resolve the matter to everyone's satisfaction."

PSC spokeswoman Cindy Muir said the case is on the agency's April 21 docket. Hearings begin at 9:30 a.m. and occur at the PSC's Tallahassee headquarters.

Lisa Buie can be reached at or (813) 909-4604.

Fast facts

Long dispute put funds in limbo

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. 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 a lawyer from the Office of Public Counsel working on their behalf.

The lawyer 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.

Aloha Utilities returns disputed sum to escrow account 04/03/09 [Last modified: Friday, April 3, 2009 8:19pm]
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