CHESTER, PA—September 13, 2022: Chester Water Authority (CWA) lays out their case for water affordability with Governor Tom Wolf’s newly formed Environmental Justice Advisory Board (EJAB) of Pennsylvania’s Department of Environmental Protection (DEP). In a letter sent today, CWA calls upon the EJAB to hold state-wide public hearings about water affordability and provides a list of law and water experts, environmental groups and environmental justice organizations that are available to testify.
In February, Administrative Law Judge (ALJ) Mary D. Long expressed frustration that water affordability could not be considered in the rate-making process. In her Recommended Decision regarding an Aqua rate case before the PA Public Utilities Commission (PUC), she states:
“While I recognize that the Public Utility Code permits consideration of a broad array of issues in base rate proceedings, I do not believe this is the best format to consider the complex social and economic issues related to affordability as it impacts CAP design. [The Office of Consumer Advocate] subsequently admits that the [PUC] has not established what water and wastewater burden should be deemed affordable, and concedes that the “policy decision of the appropriate water and wastewater burdens is best addressed in a statewide proceeding ‘involving all water/wastewater utilities and related stakeholders or would involve additional analysis that would require more time and date than is available in this proceeding.’”
[From 29 Estates LLC, et al. v. Aqua Penn. Wastewater, Inc.]
CWA’s eight-page letter addresses this concern over the PUC’s failure to establish a water affordability threshold and calls upon EJAB to convene the statewide proceeding that the ALJ suggests in her decision. The appeal describes how Big Water privatization deals disproportionally affect the lives of Black people and People of Color. The U.S. Environmental Protection Agency (EPA) considers 2.5% or more of median household income spent on a water bill to be unaffordable. For the City of Chester, that threshold will be breached for 49% of the city’s Black residents if the water system were to be privatized. The letter asks that the PUC take low-income residents into consideration when rendering their rate decisions. Gov. Wolf’s Environmental Justice Advisory Board is well-suited to supervise and advise the PUC on water affordability and equity.
“Water is a right not a privilege. It is essential to survive. It is essential for life. No for-profit company should make water unattainable for ratepayers due to a lack of affordability,” states Cynthia F. Leitzell, CWA Board Chair.
CWA’s Board believes that now is the time to bring this issue to the forefront as for-profit water companies gobble up municipal water/wastewater systems all over the state, including the desire to take over their own. CWA has been defending a hostile take-over attempt from Aqua since 2017. “The effects of Act 12 on the public can be seen across Pennsylvania. Aqua recently purchased municipal systems in Limerick Township, New Garden, East Norriton, Cheltenham and East Bradford. Ratepayers in all five towns have seen dramatic increases in their bills,” explains Lenny Rivera, CWA Board member. Limerick Township’s rate increased by 98%; New Garden by 90%, East Norriton by 73%, Cheltenham by 69% and East Bradford by 47%. The negative effects are often masked behind discount programs or deferred rate increases. When York County’s public wastewater system was recently sold to Pennsylvania American Water, the deal prohibits American from raising rates for three years, but after that, rates will skyrocket by 50%. “It’s sometimes delayed sticker shock, but sticker shock nonetheless. And once these rates go up, they never come down,” Mr. Rivera added.
It all comes down to Act 12. In 2016, the Pennsylvania Legislature passed a bill known as Act 12 that allows private, investor-owned utilities to purchase public municipal water and wastewater systems at exorbitant prices and then recoup the sale price plus a profit from the public by raising rates. Although Act 12 requires that the sought-after water and wastewater systems be appraised to determine a baseline for the value of the systems, the appraisals are done in accordance with a method called “fair market value” that objectively yields inflated appraisals far above traditional metrics of valuing a system based on its original cost less depreciation.
“What happens is that Big Water takes these inflated values to local governments and entices them with short term windfalls of cash for a lifetime of financial misery for their constituents,” notes Ms. Leitzell. “Local governments, who are either cash strapped or do not want to raise taxes on their residents take the ‘too good to be true’ deal. They don’t realize the fact that they are crippling their residents with higher water and sewer bills not just now, but forever in the future. What happens as a result? These deals make their communities less desirable for people to move there, shop there, and spend their lives there. People want to save money and enjoy their lives, not spend their life savings on the water bill.”
CWA is working with noted Philadelphia civil rights attorney Riley H. Ross III, Esquire as a leader of the team for the water affordability appeal to EJAB. “I work to help people the only way I know how: By fighting for their rights and ensuring that they are treated fairly. My clients look to me to protect them and to make sure that the law provides them with all the rights and security to which they are entitled,” says Mr. Ross.
“CWA encourages our ratepayers and the public to ask the tough questions about these deals and seek answers,” states Ms. Leitzell. “Continue to reach out to your elected officials. For-profit water has strong lobbyists in Harrisburg. CWA, thankfully, has their dedicated ratepayers and the community at large. We must keep fighting for our most valuable public resource—our water.”
CWA continues its fight to stop a hostile takeover by Aqua. Since rejecting Aqua’s unsolicited offer in 2017, the current CWA board has saved its ratepayers $276,337,608* over what they would have paid as Aqua customers. The CWA Board is a group of dedicated public servants and community leaders whose exemplary commitment to the public ensures safe, quality, affordable drinking water. To learn more, visit savecwa.org.
*Cumulative savings from 5/18/17 (board rejects offer) until end of current board term on 11/26/22.