On December 16, 2021, Marc A. Lucca, President of Aqua Pennsylvania, provided comments during the meeting of the CWA’s Board. Mr. Lucca’s comments were made in an effort to garner support for, in his words, “Aqua’s future ownership of CWA.” While Mr. Lucca addressed various aspects of Aqua’s notorious record—including its well-documented history of hiking customer rates and closing off and selling public open space—not once did Mr. Lucca mention any benefit whatsoever to CWA customers, CWA employees or the general public should Aqua’s proposed “future ownership” become reality.
Compare Aqua’s silence to the well-known benefits of CWA water. Unlike Aqua (which reported net income of $188 million in 2020),1 the CWA has no shareholders to which it must send profits. As a non-profit, money from CWA customers goes right back into running the water system. The CWA’s entire model promotes quality, efficiency and cost savings. It has no incentive to overcharge or cut corners because it is not under any duty to maximize shareholder profits.
Mr. Lucca does not claim that Aqua’s ownership would benefit the community by providing better water or better rates—because he cannot. The CWA, dating back over 150 years, has an outstanding reputation of being well managed and well maintained. This has been recognized through the many awards the CWA has received in recent years from organizations including Partnership for Safe Water, the American Water Works Association, the United Way of Greater Philadelphia and Southern New Jersey, and the Area Wide Optimization Program.2 The CWA is financially sound and has an excellent credit rating and Better Business Bureau rating. Its infrastructure is well maintained and its rates are far lower than the rates of investor-owned utilities like Aqua. This is not a situation where Aqua would be rescuing a distressed municipal authority by privatizing it. There is simply nothing for Aqua to fix, and no benefit its ownership can provide to anyone but Aqua’s shareholders.
Mr. Lucca did, however, address several well-founded concerns about Aqua. Regarding rates, Mr. Lucca relayed Aqua’s claim that it would keep rates flat for 10 years. It is a hollow promise, and Aqua knows this, because Aqua does not set the rates. The Pennsylvania Public Utility Commission (PUC) does, and it is guided by a policy known as “single tariff pricing.” This policy essentially requires similar customers to pay similar prices for similar services. That means if CWA ratepayers become Aqua ratepayers, they will need to pay rates similar to what Aqua charges its ratepayers—rates much higher than what they pay under the CWA.
In addition, as Mr. Lucca explains, the purported “rate stability fund” would not even be provided by Aqua—it would supposedly be provided by the City of Chester. So, to be clear, this is the very best Aqua can offer ratepayers: a non-binding “plan” by the City’s mayor—not Aqua—to “partially offset” rates over which neither the City nor Aqua have any control.
Also, even if Aqua actually had the ability to promise temporary rate stability, what happens after that period of stability expires? What is to keep Aqua from imposing massive rate increases? In just the last few months, we’ve seen Aqua make various rate increase requests to the PUC seeking to raise rates by, on average, over 17% for drinking water and over 34% for wastewater.4 What exorbitant rate increases would Aqua request to offset any loss of profits it sustained during a period of rate stability?
Even putting aside the rate increases Aqua intends to seek after 10 years, expert analysis based on Aqua’s current rates reveals that the average residential customer in the CWA’s service area would end up paying more than $500 extra per year under Aqua ownership.5 This would have a particularly devastating effect on City of Chester residents, many of whom are already below the poverty line. In addition, commercial and industrial customers in the City would end up paying millions of dollars more under Aqua’s rates, which could potentially drive existing businesses to leave the City and make the City less competitive for attracting new businesses. All this would come with no added benefit to customers.
Mr. Lucca also asserts that Aqua would not restrict recreational activities at the Octoraro Reservoir or develop property around the reservoir. Why should anyone believe this claim in light of what Aqua has done with other reservoirs under its ownership? Aqua has already banned fishing at Springton Reservoir in Delaware County, Pickering Creek Reservoir in Chester County, and Churchville Reservoir in Bucks County.7 In the case of Springton Reservoir, fishing had been permitted ever since the reservoir’s creation in the 1930s but was banned in the early 2000s—around the same time the surrounding forest, which was sold off by Aqua, was leveled and developed into Springton Lake Village. In response to a public outcry over the fishing ban, Chris Franklin (now CEO of Aqua’s parent company, Essential Utilities, Inc.) authored a letter to The Philadelphia Inquirer in June 2004 in which he asserted:
[W]e had to address increased security concerns after the Sept. 11 terrorist attacks. Although no specific threats exist, these concerns led us to take proactive measures to restrict access to our reservoirs. In addition, in today’s litigious society, restricting access was also necessary to protect the company from potential lawsuits that could arise if accidents were to occur on the property. In the past, there have been several occurrences in which individuals did not comply with posted signs and injuries resulted.8
The reservoir still remains closed to the public, now more than two decades after 9/11. Is there any reason why this rationale for restricting public access would not apply to the Octoraro Reservoir? Clearly, non-specific “security concerns” and a desire to avoid lawsuits when individuals fail to “comply with posted signs” could serve as pretext for closing any reservoir. Aqua’s handling of the Springton Reservoir shows that once the company owns a reservoir, it simply does not care how the public feels about recreational activities. If Aqua truly cared, it would reopen the reservoir to the public.
It is also clear that Aqua does not care about the negative effects of developing a watershed as much as it cares about profits. One of the reasons the CWA has kept the area surrounding the Octoraro Reservoir undeveloped is to protect the quality of its water. Compare this to Aqua’s selling off of the land surrounding the Springton Reservoir to developers despite the obvious contaminants that result from developments, such as household and lawn chemicals, automotive fluids, fertilizers, pesticides and herbicides, all flowing into the reservoir.
Finally, Mr. Lucca says he wants to be “crystal clear” about Aqua’s commitments to the “Octorara” Reservoir. Aqua’s position is crystal clear—nowhere in its 58-page proposed Asset Purchase Agreement does it mention the reservoir even once.9 Notably, Aqua’s proposed agreement with the City to take over the CWA had to be obtained through Right to Know Requests because Aqua and the City have withheld all versions of the agreement from the public. Nevertheless, despite their efforts to hide the truth, we do know this: when it comes to the details of Aqua’s financial gain, the company takes great pains to cross every “t” and dot every “i”—when it comes to the “Octorara” Reservoir, however, Aqua obviously could not care less.
The CWA agrees with Mr. Lucca that our focus should be “the best outcome for the long-term benefit of customers and employees.” However, to believe that Aqua would provide any “long-term benefit” to anyone but its shareholders is to ignore Aqua’s history, its own words and the very nature of its business.
1 See Maykuth, Andrew, “Aqua Pa., big buyer of town utilities, seeks to boost suburban water bills 17% — and sewer charges far more,” The Philadelphia Inquirer (Aug. 23, 2021), available at https://www.inquirer.com/business/aqua-pennsylvania-seeks-water-wastewater-rate-increase-20210823.html
4 See Gaw, Richard, “New Garden residents respond to Aqua’s proposed rate increase,” Chester County Press (Sept. 21, 2021), available at https://www.chestercounty.com/2021/09/21/368938/new-garden-residents-respond-to-aquas-proposed-rate-increase
8 See Franklin, Christopher H., “Security issues behind reservoir’s fishing limits,” The Philadelphia Inquirer at p. B02 (June 14, 2004).
9 See proposed “ASSET PURCHASE AGREEMENT By and Among The City of Chester, Pennsylvania, As Seller and Aqua Pennsylvania, Inc., As Buyer” (July 23, 2020).