How a recent court ruling could put the brakes on water and sewer privatization in Pennsylvania

This story originally appeared on Spotlight PA.

A Pennsylvania court recently found a state commission should not have approved the sale of a municipal sewer system to a private company because the deal would harm consumers, a ruling that has the potential to raise the bar for such acquisitions.

The decision challenges six years of precedent in favor of water consolidation that critics contend has led to customers overpaying tens of millions of dollars on their bills.

The Public Utility Commission, which approved the deal, said it was still reviewing the ruling. But privatization skeptics say that if the ruling stands it will force the panel to more closely scrutinize proposals.

“I think this case represents a significant win for consumers in Pennsylvania,” said Patrick Cicero, the state’s appointed consumer advocate who filed the challenge, “because it provides a roadmap that is unequivocally clear that the Public Utility Commission has to do a fact-based scrutiny of these cases.”

In the July 31 ruling, a three-judge Commonwealth Court panel found the Public Utility Commission erred in allowing Bryn Mawr-based Aqua Pennsylvania to buy a municipal sewer system without showing how the sale would benefit the public.

The judges found that the potential doubling of nearly 3,900 customers’ bills in a suburban Philadelphia township outweighed the possible benefits from digital billing, a 24/7 hotline, and almost $17 million in planned investment for the system.

The Public Utility Commission is a five-member board appointed by the governor and confirmed by the state Senate that regulates and approves rates for hundreds of companies that provide electricity, water, gas, and telephone services, among others, to millions of Pennsylvanians.

The commission has allowed private water companies, including Aqua, to buy 20 local water and sewer systems since 2016, according to the Pennsylvania Office of Consumer Advocate. These acquisitions have led to $68 million in additional annual charges on customers’ water bills, the office said.

The ruling is a “shot over the bow” for the commission, said Andrew Place, a former utility commissioner who served from 2015 to 2020 and frequently dissented from the commissions’ decisions to approve previous acquisitions under similar circumstances.

“This wasn’t nuanced or a close call,” he told Spotlight PA. “This was, ‘You guys didn’t get this right, period.”

  • August 11, 2023
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