Pennsylvania approves controversial takeover of city of Chesco sewer system by Aqua Pa.

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Pennsylvania regulators on Friday approved Aqua Pennsylvania’s $17.5 million takeover of a Chester County town’s sewage system, reversing an administrative judge’s recommendation to dismiss the sale as prejudicial to new and existing Aqua customers.

The Pennsylvania Public Utility Commission has approved Aqua’s acquisition of the Willistown Township sewer system, which serves approximately 2,294 customers, primarily outside of Malvern Borough. The privatization of the Willistown system is the latest successful effort to acquire public water and sanitation systems under a 2016 law that encourages private ownership of municipal water services.

On April 21, Administrative Law Judge Jeffrey A. Watson recommended denying approval of the transaction, which he said would result in higher rates for Willistown customers as well as existing Aqua customers in matter of water and wastewater. Watson said the increased costs to the consumer outweighed the public benefits from the sale.

The PUC, in its order released Friday, reviewed the same evidence Watson reviewed and said it concluded “that Aqua has proven that it is technically, legally and financially fit to acquire the Township System, and demonstrated that the acquisition has substantial affirmative effects”. the public benefits which outweigh the alleged harms alleged by the parties”.

READ MORE: In suburban Philadelphia, sewer systems are up for sale and citizens push back, fearing rate hikes

The sale could have implications for nearby public sewer systems that interconnect with the Willistown system, including Aqua’s $54.9 million deal to buy the East Whiteland sewer system . Another hearing reviewer, Marta Guhl, recommended in May that the PUC reject the East Whiteland transaction, saying Aqua had demonstrated no cost savings or efficiency from the East Whiteland transaction.

The PUC approved Willistown’s move privately in a 3-0 vote on Friday to beat a statutory six-month deadline that required it to make a decision before its next public meeting on Thursday, Nils Hagen-Fredericksen said. , the spokesperson for the PUC. in an email. “If committee action is required before the next scheduled public meeting, the commissioners may proceed to a vote by notation on the matter – which is then formally announced at the next public meeting,” he wrote.

Opponents of the sale, including a residents’ group and the Pennsylvania Office of Consumer Advocate, can appeal a PUC decision to the Commonwealth Court.

The sale could become a test of the underlying rationale for the state’s decision in 2016 to encourage the consolidation of small public water and sanitation systems under private ownership. Some critics say the law was intended to encourage private water companies to take over financially troubled public systems. But Watson found that the relatively new system in Willistown is well managed and adequately funded, and that the affluent township is “financially able to complete all necessary improvements and upgrades.”

The 2016 law, called Law 12, made it easier for private utilities to offer cities “fair market” prices for their utility assets, where buyers were previously limited to recovering from customers only the book value of assets. The law has sometimes led to ever-higher prices for utilities, which critics say drives up utility rates.

The PUC in May approved an Aqua Pennsylvania rate increase that will increase most customers’ monthly residential water bills by 12 percent from $69.35 to $77.51, an increase of 8 percent. $16. An average Aqua residential wastewater bill will increase 59%, from $55.51 to $88.18, according to Aqua. Water and sewage bills are based on households using 4,000 gallons per month.

Willistown customers currently pay around $63.63 per month. These rates would be frozen for two years, transferring part of the cost of paying for the new system to existing Aqua customers.

Aqua, in urging the PUC to accept the sale of Willistown, cited the PUC’s track record of supporting the consolidation and regionalization of water and sanitation systems, citing a 2006 commission decision that concluded that “the acquisition of smaller systems by larger, more viable systems will likely improve the overall long-term viability of the water and wastewater industry.

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