After the passage of Act 12 in 2016, there has been a flurry of private-company purchases of publicly-owned water and wastewater systems. And there has been an accompanying flurry of higher rates for customers. Now a Chester County Republican says he has had enough.
State Rep. John Lawrence (R-West Grove) wants ratepayers to be able to vote on whether their water or sewer provider is sold and also have “unbiased information to make informed decisions.”
Lawrence said he planned to introduce four bills that would repeal Act 12 and is circulating a memorandum to garner co-sponsors.
Act 12 permits private companies to purchase public water systems and charge residents higher fees based on the network’s appraised fair market value. In his memorandum, Lawrence said the result has been greatly increased costs for ratepayers throughout the state.
At issue, Lawrence wrote, is the way utility systems are appraised before their sale—and how the appraisers themselves are compensated.
“In a direct conflict of interest, these appraisers can get paid more if they provide a higher appraisal value to their clients,” Lawrence wrote. “Note that the law allows the Public Utility Commission to approve a different (perhaps higher) rate.
“These fees are then eventually passed along to – ratepayers.”
Lawrence told DVJournal he has “heard from many who are very concerned about municipal water and wastewater systems being sold to the highest bidder under the provisions of Act 12.”
“In particular, the proposed takeover of Chester Water Authority has galvanized folks across Chester and Delaware Counties in opposition,” he said. “I am fighting the sale of CWA both in the legislature and the courts, and these bills are the latest effort in that fight.”
CWA’s attorney Frank Catania praised Lawrence and Rep. Christine Sappey (D-Kennett Square) and Sen. John Kane (D-Chester) for their help with the issue.
“We’re in favor of his efforts because he’s letting the decisions stay with the ratepayers,” said Catania. “He’s letting them decide the issue. It’s really a bipartisan effort.”
“We’re 100 percent supportive,” said Catania.
Lawrence’s proposal would repeal Act 12 and “remove the ability of the PUC to approve a rate higher than 5 percent for these ‘utility valuation experts.'”
The legislation would also ensure that ratepayers are notified directly of any payments to estimators, requiring “that these fees be disclosed to ratepayers in a special mailing/notification.”
Currently, Lawrence wrote in the memo, ratepayers “have no ability to speak directly into the decision to sell a municipal water or sewer system.” He said his legislation will ensure “greater transparency and disclosure for those most affected – utility ratepayers.”
Act 12 has been controversial since its passage. The Philadelphia Inquirer wrote in 2018 that Act 12 had set off “a feeding frenzy for public water systems” in the state.
Last year residents of Bucks County mobilized to oppose efforts by Aqua PA to purchase the county’s water and sewer systems for just over $1 billion. The county subsequently backed away from that sale, pledging instead to invest around $155 million in its aging sewer system.
A judge in February ordered a stay on the proposed sale of the Delaware County Regional Water Quality Control Authority to Aqua PA, citing the fact that “the terms of the contract [between the two authorities] remain unsettled.”
Lawrence told DVJournal his proposals “provide reform, accountability, and transparency.”
“Ratepayers should have the right to vote on any proposal to sell a municipal water or wastewater system and have reliable information about what it will cost in the short and long term,” he argued.
“Current law provides little or no opportunity for meaningful ratepayer input before the sale of municipal water and sewer systems, ” he added, “even though ratepayers are expected to pay the bill for decades to come.”