The following article was written by Peg Quann from The Bucks County Courier Times and originally published here:
Stop negotiations and do not sell the sewer system.
That message came Tuesday directly from the Bucks County Commissioners to the Bucks County Water and Sewer Authority, which is contemplating a $1.1 billion sale to Aqua Pennsylvania. While the commissioners can’t outright stop the sale, their lack of support for it could effectively kill the deal.
The commissioners have influence as Bucks County owns the authority and stood to gain between $700 million and $949 million from proceeds of any sale once debts were paid off, according to early estimates. Without a sale, BCWSA says it is looking at some $254 million to repair or replace aging piping and equipment.
Within hours of their position being made public, the chairman of the BCWSA said he would no longer support the sale and had informed the board.
Commissioner Chairman Bob Harvie and Commissioner Diane Ellis-Marseglia, the two Democrats on the board, said they heard loudly and clearly that county residents don’t want the deal to go forward. While BCWSA board will ultimately decide whether to proceed, the commissioners do have the authority to disband the board if it does not stop the sale.
The commissioners made their positions known Tuesday morning, the day before a 9 a.m. protest rally was to take place. That rally now will be held to thank the commissioners prior to their meeting at the county administration building in Doylestown.
How this will affect the rally plans was not immediately known Tuesday.
County spokesman James O’Malley issued statements from both Harvie and Marseglia.
“While I see much potential in adding an estimated billion dollars to the county treasury, I cannot say that I feel comfortable with this transaction. I did speak with the Chair of the Authority (John Cordisco) to ask that he and the rest of the board stop any negotiations and not sell the BCWSA operations,” Harvie said. “As a Bucks County Commissioner, I don’t have a direct vote on whether or not a sale should happen, but I and the other commissioners do have the power to change the charter of the Bucks County Water and Sewer Authority.”
Marseglia said she too was “calling on the Bucks County Water & Sewer Authority to end consideration of its proposed sale to Aqua Inc.”
She ended her statement by noting that not having a sale “doesn’t get us out of the woods. Harsh realities do await,” she said in the form of more than $250 million in needed repairs to the sewer system. “But I do believe we can find solutions to those issues without involving the sale of one of our public institutions to a private corporation, under which we’d no longer have any oversight.”
Commissioner Gene DiGirolamo, the lone Republican on the board, issued a statement through O’Malley later Tuesday.
“It is beyond obvious that this is an issue that strikes a nerve with the people I and the other Commissioners have been elected to represent,.” the statement read.
DiGirolamo said it was important for the BCWSA to hear out the proposal and thanked those working to study it. “However,” he said, “given the remaining uncertainties around the potential sale, and the sheer amount of public opposition to it, that it is in the best interests of the people of Bucks County that the authority end its negotiations with Aqua, Inc.”
Before the commissioners spoke out against it, municipal opposition continued to grow last week. However, three former public utility officials backed the proposal.
The former public utility commissioners from Pennsylvania, New Jersey and Illinois sent a letter of support to the Bucks County Water and Sewer Authority as they explained why the state legislature and Gov. Tom Wolf approved legislation to entice private companies to buy public water and sewer systems.
“Local leaders in Pennsylvania and around the country are determining that it is in the best interest of their communities to allow professional water companies with scale and expertise to rebuild aging infrastructure, manage new and emerging environmental and water quality regulations and redeploy municipal assets to more pressing needs,” the Aug. 29 letter from former Pennsylvania Public Utility Commissioner Norman Kennard, former New Jersey Board of Public Utilities President Richard Mroz and former Chair and CEO of the Illinois Commerce Commission Brien Sheahan states.
A spokesperson for Aqua could not be reached immediately Tuesday morning.
Cordisco tells BCWSA board he does not support sale
Speaking for the BCWSA, Cordisco said on Tuesday that board had a “fiduciary responsibility to conduct our own examination and due diligence to determine what would be the best outcome for our customers, communities and employees” given the $1.1 billion proposal. The BCWSA has some 75,000 wastewater customers.
He said the out outreach and fact finding was part of that and thanked staff and community members for the information and feedback.
“We respect Commissioners Harvie and Ellis-Marseglia’s opinions,” Cordisco continued, “and have always believed their position on the proposed sale would be vitally important to any decision we make. We were never going to be in conflict with the commissioners’ position.
“As such, I have informed the BCWSA board members that I do not support moving forward with the proposed offer, and we will determine the next appropriate steps. Additionally, I agree with the commissioners that harsh realities do await in the form of significant system repairs, and we will continue to work with the county to find solutions to alleviate the impact on our customers and communities we serve.”
Mike Sullivan, Region 1 director of the Pennsylvania Municipal Authorities Association and the executive director of the Warwick Township Water and Sewer Authority, said he was pleased with the commissioners’ comments. “I would like to thank the commissioners and I fully support their position. We call for the BCWSA Board to do the right thing by respecting and immediately implementing the commissioners’ position. These critical services should remain in the public trust,” he said.
State Sen. Steve Santarsiero, chair of the Bucks Democrats, thanked the commissioners for wanting to nix the deal while acknowledging the costly repairs that are still needed to the sewer system.
“While the Authority faces challenges moving forward — indeed, it was those challenges thatprecipitated the discussion of a sale in the first place — I am certain that its Board of Directors will continue towork together to meet them in a manner that best serves ratepayers and our communities,” Santarsiero said.
Many Bucks County municipalities opposed sale
Tuesday’s change of course came as 19 municipalities in Bucks County and Springfield in eastern Montgomery County have signed letters or resolutions opposing the sale.
The Northampton Township Municipal Authority, which buys water wholesale from the BCWSA, also proposed that should the BCWSA not “immediately abandon its negotiations with Aqua,” that the Bucks County Commissioners should “move to disband the authority and have Bucks County itself acquire the sewer system and operations, thereby preserving the non-profit, publicly accountable nature of the infrastructure for the people and commercial enterprises of Bucks County.”
Bensalem, Doylestown Township, Plumstead and Warrington had formed a consortium to legally fight the proposed sale, said Stacey Mulholland of the Bucks County Association of Township Officials, while the North Penn and North Wales water authorities have also said they oppose the sale. Tony Bellitto, North Penn CEO, said they would not sell water to the BCWSA if it eventually planned to sell its water system to Aqua.
A sale of the water system had not been proposed.
Bucks commissioners’ questions answered
The commissioners’ letter and statement of opposition comes after the board sent a list of questions to the BCWSA about the sale. Authority CEO CEO Ben Jones last week sent an 11-page reply.
Jones said in answering the commissioners’ questions that the authority has $177,371,017 in debt to be paid off if the deal went through.
Cordisco said earlier that Bucks County could reap the proceeds from the sale after the BCWSA debt was paid, so the county could gain approximately $949 million although it remained to be seen if the BCWSA would first set up a fund to help its sewer customers pay the higher bills they would anticipate getting from Aqua.
The needed fund amount could be between $136 million and $294 million, depending on whether it was set up to meet the gap between the anticipated BCWSA service prices and Aqua prices for five or 10 years, Jones stated in his answers to the commissioners. That fund would thereby lessen the amount the county could receive, down to about $700 million.
Aging infrastructure is a major issue for the BCWSA, which notes that if a deal didn’t go through it may need to spend about $254 million to repair or replace aging piping and equipment and would have to raise those funds through “a combination of service charges (customer rates) and debt instruments such as bonds.”
Jones said earlier that doesn’t include repairs or replacement of laterals to individual homes or businesses, for which the owner would have to pay if the sewer system is not sold.
Some customers have insurance to cover repairs to these, but Aqua could provide the repair service where the BCWSA is not permitted through a court settlement prohibiting it doing this work on privately owned land.
In answer to a question Harvie had about how the sale would affect the municipal authorities that buy water or sewer service wholesale from the BCWSA, Jones wrote that these customers would have two options – assign their existing contract to Aqua or negotiate a new contract prior to closing with Aqua.
Since some municipal authorities that sold their systems to the BCWSA may want to buy their sewer service back from BCWSA before an Aqua deal was finalized, Jones said “BCWSA thinks it is premature at this stage to speculate about what impact this might have on negotiations with Aqua.”
Former PUC officials cite sale benefits
In their own letter, the three PUC officials explained why the Republican led state legislature and Democratic Gov. Tom Wolf agreed on the need for Act 12 in 2016 that “provided a pathway” for private utilities to acquire public water and sewer services.
“The reason Act 12 is such a valuable piece of legislation is because water and wastewater systems today face unprecedented challenges. Many water systems have cast and ductile iron pipes that are reaching the end of their useful lives. Replacing this infrastructure is expensive, making it difficult to keep rates affordable. Moreover, advances in technology are continually detecting new contaminants in water resulting in more stringent state and federal environmental water quality regulations that can be costly and challenging to comply with,” the letter states.
“In addition, utilities are increasingly the target of cyber criminals, making it more important than ever that water systems have effective (often complicated) cyber security measures in place.”
The American Society of Civil Engineers gave Pennsylvania grades of D and D- for its water and wastewater systems, the letter adds, noting that the commonwealth has a funding gap of $8.4 billion over the next 10 years to repair existing sewer systems to meet regulatory requirements.
When it comes to water infrastructure, the PUC commissioners note that Pennsylvania needs to spend more than $16 billion over 20 years to modernize its drinking water infrastructure. “As you well know, the BCWSA is no exception. It needs an estimated $400 million in sewer repairs and upgrades alone. In Plumstead Township, for example, up to 75% of customers’ sewer lines leak and need to be replaced.”
The letter goes on to say that with new health advisories regarding PFAS chemicals that were found in drinking water near the former military air bases in Bucks and eastern Montgomery counties, “professional water companies have been proactively working to remove these ‘forever chemicals’ as part of their promise to ensure safe drinking water for the communities they serve.’
While many local residents and municipal officials have been critical of the proposed sale to Aqua, which is part of Essential Utilities that provides water and wastewater services to 5 million people across 10 states, the former PUC commissioners are critical of those who “ignore, misunderstand or misrepresent the compelling financial and operational benefits” of a community working with a privately owned utility.
Selling water and wastewater systems to a private water company allows access to the company’s expertise and scale and will provide customers with “high quality, reliable service for a fair price under the watchful eye of the state public utility commission, attorney general and other consumer advocates,” it concluded.
Private utilities can raise funds through selling stock as well as through ratepayers, but they also must answer to these stockholders who want to make a profit, those against the sale have said, citing the increased bills Aqua has charged ratepayers in some Pennsylvania communities.
Speaking for the municipalities, Mulholland said that the BCWSA is not a small authority. They’re a large-scale operation serving 100,000 customers, she pointed out.
On its website,the authority has posted information on the sale offer but noted it will put “communities, customers and employees first with every decision.”
by Peg Quann
Bucks County Courier Times
