(Last updated: March 18, 2022)
Essential Utilities, Inc. (formerly “Aqua America”), a for-profit corporation, has been attempting a hostile takeover of the Chester Water Authority (CWA), an award-winning, non-profit municipal water authority. Essential Utilities, through its wholly-owned subsidiary, Aqua Pennsylvania, Inc. (Aqua), has been trying to force a deal ever since 2017, and made Governor Tom Wolf’s office aware of its intentions prior to its first uninvited offer to purchase the CWA in May 2017. Aqua wants to own the CWA because it is well run and well maintained, and provides water to approximately 200,000 residents in Delaware County and Chester County, Pennsylvania. The CWA does not profit from its ratepayers, does not charge more than the cost of service, and has no incentive to charge more than needed to provide services. This makes sense—clean drinking water is a basic human need. Not one of the 200,000 residents in the CWA’s service area can live without it.
Yet, the threat of losing access to water is very real for many people. For CWA ratepayers in the City of Chester who live below the poverty line, the fact that the CWA exists as a non-profit is the very reason why they can continue to afford their water and avoid the cascading devastation of a water shut off: inability to cook, bathe, clean, or flush toilets, conditions that can quickly result in losing one’s health, one’s home, one’s parental rights, and even one’s freedom under sanitation laws. Unfortunately, these horrific consequences, which disproportionately impact communities of color as detailed in a 2019 report by the NAACP Legal Defense and Educational Fund, are inevitable if Aqua succeeds in acquiring the CWA. The national, non-profit advocacy group, Food & Water Watch, has found that the “most immediate effect” of Aqua’s takeover would be significantly higher rates by which the “water bill burden in Chester would go from about 1.2 percent of median household income to 3.3 percent of median household income, a level generally deemed unaffordable by the Environmental Protection Agency and the United Nations.”
Most water systems in the United States are not privately owned—there are strong public policy reasons for not allowing a for-profit company to enjoy a monopoly over something no one can refuse to buy. But in those places where Aqua has been allowed to operate, the profits to its remote corporate shareholders, institutional investors, and executives have been staggering. For example, in 2020 alone, Essential/Aqua reportedly paid its CEO, Chris Franklin, $7.2 million in total annual compensation. The Simply Wall St. article reporting Franklin’s salary explains: “We think that the total shareholder return of 42%, over three years, would leave most Essential Utilities, Inc. shareholders smiling. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.” For profiteers of the earth’s limited freshwater resources (comprising less than 1% of all water), a 42% return is just the beginning. Essential/Aqua recently reported a net income increase of 51.5% over the last year alone, with 2020 profits of $284.8 million soaring to $431.6 million in 2021. For the company’s second-largest shareholder, the Canadian Public Pension Investment Board, this is great news, especially insofar as its pensioners live nowhere near the communities carrying the burden of ever-rising water costs. It is no wonder why hedge fund manager Michael Burry (who, as shown in the 2015 film, The Big Short, made his fortune predicting the housing bubble burst of 2008) is now “focusing all of his trading on one commodity: Water.”
One thing, however, stands in the way of limitless corporate profits: the public’s refusal to surrender control over their water. That is why Essential/Aqua’s business growth model is almost entirely dependent on pressuring state and local governments to divest the public of that control. In 2021, more than 99% of the value of the company’s acquisitions (closed and pending) came from buying municipal authorities as reported on pages of 20-24 of its latest Earnings Call.
Preserving the public’s control over their water is what this fight is about. That means protecting both the affordability of water as well as the public’s continued access to the CWA’s water source, the pristine Octoraro Reservoir.
Make no mistake: once the public gives up their right to control their water, they will never get it back.