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The Derrick: Aqua PA Spells Out Venango Water Co. Expenses Since Its PUC-Ordered Emergency Role [Conventional Oil Well Wastewater Spill Cost Water Customers $900,000, So Far, In Venango County]

This article first appeared in The Derrick on February 22, 2025 [PDF of Article]--

Aqua Pennsylvania reports operating the Venango Water Company has cost $1,103,000 since it was ordered by the Public Utility Commission to act as a Receiver for the company in August 2023.

The PUC ordered Aqua to take over as Receiver after a Petro Erie, Inc. conventional oil well wastewater spill in July 2023 contaminated Bellow Spring, one of the springs supplying water to Venango Water Company customers.

Amanda Burge, a spokesperson for Aqua said, “Since taking on Receivership responsibilities, we have invested more than $408,000 in upgrading the equipment and infrastructure of the system’s repairs.

“In addition, we have spent more than $695,000 to maintain operations including electricity, water and wastewater treatment chemicals and other consumables.

“This also includes the expense associated with hauling drinking water into the system so that the customers can continue to have drinking water provided to their homes and businesses.”

In a separate report on December 30, Aqua said its water hauling costs were $308,231 to haul 5.9 million gallons to supplement the Venango Water Company water supply from June to December 2024.

Burge added, “These expenditures generally reflect our actual costs incurred. Our labor and management teams have been supplementing these systems until we can hire full-time staff. We leverage our extensive corporate resources to manage the operations of these systems, including billing, regulatory interfaces, fleet management, accounting, and more.”

Aqua also prepared a Capital Budget listing larger repairs over the longer needed to the Venango Water system totalling $5.6 million in system improvements, as directed by the PUC. Read more here.

Needed capital improvements include developing a new well as a source of water, replacing a water storage tank, constructing a new water treatment system at Bellows Spring and other improvements.

Annual reports filed with the PUC show the Venango Water Company receives approximately $142,799 in revenue from its ratepayers annually, according to Aqua Pennsylvania.

[Venango Water Company has 179 residential, 26 commercial, 4 industrial, 5 public customers.]

The gap between the costs incurred by Aqua and the revenue now from Venango Water Company ratepayers is more than an estimated $900,000, according to the numbers provided by Aqua Pennsylvania.

Burge explained, “Revenues received from the Rhodes Utilities customers are currently used first to operate the systems; however, to the extent that those revenues are insufficient to cover the full operating costs Aqua Pennsylvania provides the additional financial support needed to maintain safe and reliable utility service.

“If the PUC requires Aqua to purchase the system, Aqua would recover the costs associated with running and operating the system in its next base rate case which may include raising customer rates in the VWC,” said Burge.

Petro Erie Inc.

Another possible source of funding to meet this $900,000 gap, other than ratepayers, is from an August 16, 2023 order the Department of Environmental Protection issued to Petro Erie Inc.

The DEP order requires the company to not only clean up the wastewater spill but to also reimburse the Venango Water Company and Aqua Pennsylvania for any temporary and permanent increased operating and maintenance costs caused by the spill.

However, Petro Erie Inc. appealed the order to the Environmental Hearing Board in September 2023 and the case is still pending. [EHB Docket 2023075]

On January 31 of this year, DEP and Petro Erie reported to the Board that no agreement to resolve the appeal has been reached saying, “As anticipated, the only remaining issues are financial in nature.”

Both parties to the appeal suggested mediation may help reach a final agreement and the first session was held on February 13. The outcome of those talks is not known at this time.

Petro Erie had claimed in its appeal it doesn’t have the “financial ability to comply” with the order. Read more here.

Status Of Other 6 Rhodes Companies

On October 30, the Public Utility Commission approved an emergency order requiring Aqua Pennsylvania to act as temporary Receiver for the six other Rhodes Estate water and wastewater companies, in addition to the already issued emergency order regarding Venango Water Company, when the officers and employees of those companies resigned.

The six other companies are located in Venango, Forest and Clarion--

-- Sugarcreek Water Company, Sugarcreek Boro, Venango County [67 residential, 1 commercial, 3 public customers]

-- West Hickory Water Company, Harmony Twp., Forest County [172 residential, 3 commercial, 2 public customers]

-- Plumer Water Company, Cornplanter Twp., Venango County [53 residential, 1 commercial, 4 public customers]

-- Fryburg Water Company, Pinegrove Twp., Venango County; Washington Twp., Clarion County [165 residential, 15 commercial, 6 public customer]

-- Cooperstown Water Company, Cooperstown Boro & Jackson Twp., Venango County [127 residential customers]

-- Blaine E. Rhodes Sewer Company, Sugarcreek Boro, Venango County. [180 residential, 25 commercial, 4 industrial, 5 public customers]

Aqua submitted its initial evaluation of the condition of these companies to the PUC on December 30 that included the results of DEP inspections of each of the systems that found violations and deficiencies, some significant, that need to be corrected. Read more here.

For example, Aqua Pennsylvania already spent $36,000 to replace a generator to improve reliability at the Cooperstown Water Company after two boil water advisories had to be issued in November and December.

The reservoir structure and chemical feed system at the Fryburg Water Company is in poor condition and not operating properly.

Aqua had to haul approximately 70,000 gallons of sludge from the wastewater treatment system at the Blaine E. Rhodes Sewer Company to improve treatment efficiency, and is planning for $20,000 in electrical improvements for critical equipment.

Like with the Venango Water Company, Burge said, “We are working diligently to finalize capital plans for all systems, but given the poor condition of the current assets, we believe this will take a little time.”

Also like the Venango Water Company, the other six Rhodes Utilities have limited operating revenue from their ratepayers to cover necessary operating costs and needed improvements.

The annual revenues for each of the companies were reported by Aqua Pennsylvania from PUC annual reports are--

-- Sugarcreek Water Company - $35,045

-- West Hickory Water Company - $71,833

-- Plumer Water Company - $38,717

-- Fryburg Water Company- $108,036

-- Cooperstown Water Company - $52,675

-- Blaine E. Rhodes Sewer Company - $83,086

Next PUC Hearing

PUC Administrative Law Judge Mark A. Hoyer has scheduled the next hearing on the future of the Venango Water Company and six other Rhodes Utilities for February 26. Read more here.

The purpose of the hearing process the PUC started in January 2024 is to determine if the PUC should order Aqua Pennsylvania or another company to permanently take over the operations of one or more of the Rhodes Utilities.

Documents related to this PUC proceeding can be found at PUC Docket No. M-2023-3042180 and I-2023-3042312.

Visit the Aqua Pennsylvania Rhodes Utilities webpage for more information on the Rhodes Utilities Receivership.

Visit DEP’s Venango Water Company/Petro Erie, Inc. webpage to learn more about the actions taken by DEP.

(Photos: Row 1- Conventional oil well wastewater spill area; Row 2- Aqua PA bulk water hauling to keep water flowing to customers; DEP sampling drinking water.)

NewsClips:

-- The Derrick: Aqua Spells Out Venango Water Co. Expenses Since Its PUC-Ordered Emergency Role [PDF of Article]

-- The Derrick: GCI Water Fails To Report To Titusville Boro On How Much Oil & Gas Wastewater It Is Treating Thru The Boro’s Wastewater Plant, DEP Reporting May Not Be Accurate [PDF of Article]

Resource Link:

-- The Derrick: PUC Judge Issues Emergency Order Appointing Aqua Pennsylvania As Temporary Operator For 6 Rhodes Estate Water Companies [Serious Community Impacts Continue From Conventional Oil Well Spill In Venango County] [PaEN]

PA Oil & Gas Industry Public Notice Dashboards:

-- PA Oil & Gas Weekly Compliance Dashboard - Feb. 15 to 21 -- Shale Gas Wells Seismic Investigation; Conventional Well Spill Cost Water Co. Customers $900,000 So Far; Oil & Gas Waste Plant Fails To Report Wastewater [PaEN]

-- PA Oil & Gas Industrial Facilities: Permit Notices, Opportunities To Comment - February 22 [PaEN]

-- Environmental Integrity Project: President Orders Hundreds Of Energy Emergency Reviews Of US Army Corps Of Engineers Project Permits, Including Dozens In PA [PaEN]

-- DEP Posted 97 Pages Of Permit-Related Notices In February 22 PA Bulletin [PaEN]

Related Articles This Week:

-- The Derrick: Aqua PA Spells Out Venango Water Co. Expenses Since Its PUC-Ordered Emergency Role [Conventional Oil Well Wastewater Spill Cost Water Customers $900,000, So Far, In Venango County] [PaEN]