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Aloha Utilities loses ruling on disputed $374,00 in escrow funds

Aloha Utilities' battle for $374,000 in disputed escrow funds got much tougher Tuesday after state regulators voted to return that money to the company's former customers.

The Florida Public Service Commission said the money should be used to offset rate increases by Florida Governmental Utility Authority, the organization that in February bought Aloha's water and wastewater assets. Under the PSC decision, the $374,000 would go into a special escrow account that the authority would manage.

The PSC sided with customers who argued that the money represented earlier refunds and should be returned to them. Aloha had argued that the money should be used to defray costs to the company in connection with planning — though never completing — a water treatment system.

"Since Aloha's customers funded the original escrow account, the money should rightfully be used to benefit them," PSC chairman Matthew M. Carter II said in a news release.

The PSC staff had recommended that Aloha receive $74,000 of the escrow money due to wording in previous orders. But commissioners said the staff did not make a clear case on that point.

As of Tuesday afternoon, Aloha had not decided whether it would appeal the PSC decision to an administrative judge.

The utility also has a pending court case in which it has asked a judge to rule that the PSC lacked jurisdiction over the $374,000.

Aloha's attorney, John Wharton, said his clients were disappointed but not surprised by the PSC decision.

"It remains our position that those monies were earmarked for the improvements," Wharton said.

Aloha's critics have questioned why the company, which was sold to the Florida Governmental Utility Authority for $90.5 million, wanted to spar with its 25,000 former customers over a relatively small amount of money.

Wharton said he "understood the populist appeal of that argument," but added that "if they (Aloha) think they are entitled to the money, they have every right to pursue it."

Greg Giordano, chief legislative assistant to Aloha's most powerful critic, state Sen. Mike Fasano, R-New Port Richey, welcomed the decision Tuesday as good news.

"Customers deserve it," he said. "It's their money."

Commissioners debated whether the $374,000 should be directly refunded to existing customers or put in the escrow account. Commissioner Nathan Skop argued that issuing refunds was the cleanest way of getting the money back to customers.

One main reason? The commissioners have no control over Florida Governmental Utility Authority, meaning they are having to rely on the authority's word that the money will go toward defraying rate increases. No representative of the authority attended Tuesday's meeting.

"For all I know, they could use that money for a company picnic," Skop said.

Customer Wayne Forehand, who supported the establishment of the escrow account, told the commissioners he and others have "developed a level of trust" with the authority.

How the authority, which is raising rates to help resolve long-standing problems with the water quality, will administer the fund is unclear. A spokeswoman said the PSC's decision represented unchartered territory for the authority, and she was not sure if customers would see credits on their accounts.

The company is already getting an earful from customers who have opened their April bills and gotten sticker shock.

In Trinity, the typical household's monthly bill has gone from $56 to $89. Aloha had planned steeper increases; that same household would owe $140, the authority says.

Charles Westover, 78, of Trinity said his bill had gone up from $40 to $60.

"It's outrageous," Westover said. "I never had a problem with my water."

Jodie Tillman can be reached at jtillman@sptimes.com or (727) 869-6247.

Aloha Utilities loses ruling on disputed $374,00 in escrow funds 04/21/09 [Last modified: Tuesday, April 21, 2009 9:03pm]
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