Response: When the closing occurs, the following actions will take place:
- As soon as the closing occurs, we will open connections between the Chesapeake water system and the Indian River Water System. We will stop using the existing wells and treatment system, flush the distribution lines with Chesapeake water, and the residents will start receiving Chesapeake water.
- Soon after the closing occurs, the Indian River Shopping Center will have the ability to connect to the 12" water line on Indian River Road for domestic and fire sprinkler water. Plans for any such connections will have to go through the City's normal plan review process before any work is performed. This plan review can occur prior to closing.
- Fire hydrants will be installed in the area west of Sparrow Road, as this area is served by looped 6" water lines that can provide adequate fire flows once connected to the Chesapeake water system. The City will make its best efforts for this to occur within four months of the closing.
- A construction project will be initiated to make additional connections between the two systems, install water distribution piping, and install additional fire hydrants in the system. The project will provide better looping, flow, and fire protection to the entire system. This project will require detailed engineering design and Virginia Health Department approval. The design for this project is underway. Construction is planned to be conducted simultaneously with the sewer line replacement project that is planned for the eastern portion of the area. The construction could take up to 18 months.
Response: This acquisition is a multi-step process, much like purchasing a house, but also with the added step of approval by the State Corporation Commission (SCC). Neither the City nor Aqua can control the timeline of the SCC's decision. The basic steps are shown below, although there are many other smaller steps in-between.
- Planning Commission must conduct a Public Hearing as required by Section 15.2-2232 of the Code of the Commonwealth of Virginia. - Complete
- City Council approval of a proposed and finalized sale contract between the City of Chesapeake and Aqua Virginia. This contract also requires approval by the Board of Directors of Aqua Virginia. - Complete
- City Council approval of the funding for both the purchase price and the estimated $3.9 million in engineering and construction work. - Complete
- SCC must approve the contract and may elect to conduct a hearing prior to approving the contract - Approved March 14, 2019, closing on or about April 18, 2019
- City of Chesapeake must perform due diligence evaluations of the Indian River Water System, similar to the inspections, title searches, etc., involved when purchasing a home. - Completed
- Close on the sale.
Response: No. Aqua customers are already connected to a public water supply and previously paid the connection fee applicable at the time of their connection. There is no requirement for these customers to pay a second connection fee. New customers who establish new connections after the City of Chesapeake acquires the system will be required to pay connection fees, just as would any other new customer with a new connection anywhere else in Chesapeake.
Response: As soon as they are customers of the Chesapeake water system, residents and businesses will pay the same water and sewer rates as other customers in Chesapeake. These residents and businesses are already connected to and customers of the Chesapeake sewer system.
Response: While the acquisition increases our costs, it also increases our revenue. Over time, the entire cost of this acquisition and construction work will be recaptured by the rates paid from the residents of the Aqua Virginia territory. All customers’ rates cover both operational and capital costs of constructing, operating and maintaining our water system. In this case, the capital cost is being expended up front, but the rates from the additional customers, over time, will be sufficient to cover these construction costs.
Response: No. The Chesapeake City Council actually cancelled a 4.9% rate increase that was scheduled to take effect on July 1, 2017, and does not have any rate increase scheduled for calendar years 2018 and 2019. This acquisition has been evaluated through our rate model, and can be performed without any increase in system-wide water and/or sewer rates.
Response: This is not a joint venture, it is a purchase.
In January 2017, jointly with Aqua Virginia, the City presented several options that were being considered concurrently. These ranged from an outright purchase of the water system, or for the City to sell water to Aqua, or for it to remain as-is. The former was unacceptable to Aqua; the latter was unacceptable to the residents (and thus, to the City). The compromise position was for the City to sell water to Aqua through an agreement that would commit Aqua to improving its system over time to meet both water quality and fire flow requirements while still operating its well system to provide the majority of its water from the system. After months of negotiating that agreement, a window of opportunity opened and Aqua indicated that it was open to discussions about the potential sale of its system to Chesapeake. The City's focus immediately shifted to this latter solution, which is what the City and residents have preferred all along.
Many other steps remain before the City can complete this acquisition and integrate the system into Chesapeake's system, including receiving approval from the State Corporation Commission, which regulates the transfer of investor-owned utility assets. The City must also complete the due diligence reviews that are required for such a large action.
*The Virginian-Pilot, Jan. 24, 2017
Response: Aqua would sell all of its utility assets and modify its service territory to exclude the City of Chesapeake, which would give the City the right to provide water service in Aqua’s former territory. The purchase will involve utility assets including, but not limited to, fee simple parcels, easements, leases, groundwater wells, a water treatment and distribution system, service lines (except for customer service lines that are located on the customers’ side of Aqua’s meters), plants, equipment, and all other facilities that are utilized for the production, transmission, distribution, operation, and maintenance of the Indian River Water System. It does not include tools, rolling stock, and cash and accounts receivable up to the date of the closing.
Response: The final cost for this purchase was $1,931,600.00. The citizens in the Aqua service territory would, upon acquisition, pay the same water rates as all other customers on the City of Chesapeake’s water system. These residents would not pay another connection fee because they have been deemed to have already paid a connection fee when they connected to the Aqua Virginia system.
Response: The Indian River Water Company was formed in 1958 to provide water to what was, at that time, a relatively remote area in Norfolk County. The City has considered acquiring this system multiple time since Chesapeake became a City in 1963, but that acquisition has never been realized. In May 2000, Aqua Source Utility, Inc., acquired that portion of the Indian River Water System in Chesapeake, and the City of Virginia Beach purchased the portion of the Indian River Water System that was located in Virginia Beach. Aqua Source Utility, Inc.’s assets were thereafter acquired by Aqua America, Inc., and Aqua Virginia is a wholly owned subsidiary of Aqua America.
Additional email updates will be provided to all persons who request updates as the situation evolves.
Past updates are listed here: