HARRISBURG -At a recent hearing in the State Capitol, legislators and testifiers debated current state policies surrounding buyouts of locally-run municipal water and sewer systems by investor-owned utilities.
Investor-owned utilities can petition the Pennsylvania Public Utility Commission (PUC) to lump all approved acquisition costs, no matter how large, into existing ratepayer’s water and sewer bills. This has led to dramatic rate hikes and increased scrutiny from legislators and stakeholders.
Lawmakers heard from experts on all sides of the issue, including the utilities and consumer advocates. Rep. John Lawrence (R-Chester) questioned Aqua CEO Marc Lucca about Aqua’s ongoing efforts to purchase the Chester Water Authority. In a testy exchange, Lawrence challenged Aqua’s claim that “the City of Chester is the legal owner of CWA and has the right to sell that asset.”
“It’s outrageous to claim the City of Chester owns CWA,” said Lawrence. “CWA is an independent authority with a governing board established under state law.”
The committee also heard testimony from Rob Powelson, former chairman of the PUC and current president of a trade group representing investor-owned utilities. In 2017, then-PUC Commissioner Powelson approved the $29 million sale of the New Garden Township sewer system to investor-owned Aqua America.
Lawrence referenced a document Powelson signed approving the New Garden sale that ordered “excess costs should be borne by [Aqua] shareholders and not spread to other ratepayers.” Challenging Powelson, Lawrence pointed out that ratepayers will be stuck with the bill, not Aqua shareholders.
“You said excess costs are going to be borne by shareholders, [but] shareholders are not going to bear excess costs,” stated a skeptical Lawrence. “It’s going to be ratepayers because they are the only source of revenue the company has – it’s going to be other ratepayers making up that difference, am I correct or am I wrong?”
“The cost will be borne amongst ratepayers,” conceded Powelson.
The committee also heard from Upper Chichester Township Commissioner Nicole Whittaker who testified in favor of legislation introduced by Lawrence and Rep. Christina Sappey (D-Chester) that would require ratepayer approval before any sale of a municipal utility. “My constituents do not want the Chester Water Authority to be taken over by a private for-profit company,” said Whittaker.
Legislators also heard from PUC Consumer Advocate Tanya McCloskey, former York Water CEO Jeff Hines, and Elizabeth Marx, Director of the PA Utility Law Project.
The hearing was held jointly under the auspices of the House Consumer Affairs Subcommittee on Utilities and the House Appropriations Subcommittee on Government and Financial Oversight.
A video of the hearing can be viewed here.
Representative John Lawrence
Pennsylvania House of Representatives
Rep. John Lawrence questions former PUC Commissioner Rob Powelson during a May 26, 2021 hearing in the state Capitol.