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Aloha, Pasco customers clash over escrow cash

TRINITY — Like a lot of bad break-ups, the split between Aloha Utilities and its former customers is ending in a fight over who owns what.

At issue: More than $375,000 left in an escrow account.

Less than three weeks after Aloha sold its water and wastewater assets for $90.5 million to the Florida Governmental Utility Authority, the company's shareholders say that the escrow money is theirs and they want state regulators to release it.

Customers and their representative say: Not so fast. That's our refund money from 2002-03.

The Florida Public Service Commission has not made a decision, said spokeswoman Kirsten Olsen.

Here's how the money ended up in the escrow account:

Back 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 commission fees and fines as well as Pasco County for work it did at Aloha's request.

"Aloha is legally entitled to the money," said lawyer William Sundstrom, who estimates his client spent roughly $1 million on the plans. "It's not the customers' money, it's Aloha's."

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.

Trinity resident Wayne Forehand said he was "appalled" by Aloha's request. He said customers will ask the commission to keep the money in escrow to help cover other improvements. Their goal is to defray future rate increases that come with the authority's purchase of Aloha's assets.

"Let's use it for the good of the community," he said.

State Sen. Mike Fasano, R-New Port Richey, a customer and longtime critic of Aloha, said Tuesday that he would also fight the utility's request.

"It seems like Aloha just wants to stick their finger in the customers' eye," he said, "one more time, as they leave."

Jodie Tillman can be reached at [email protected] or (727) 869-6247.

Aloha, Pasco customers clash over escrow cash 03/17/09 [Last modified: Tuesday, March 17, 2009 9:10pm]
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