DV Journal

Pennsylvania American Water Co. (PAW) announced last week it is stepping away from a deal to buy the Towamencin Municipal Authority after a ruling from the state Public Utility Commission (PUC) changed the parameters of the arrangement.

“Since our last meeting, the Pennsylvania Public Utility Commission issued an order setting a formula that effectively determines what it deems to be a ‘reasonable’ purchase price for a wastewater system in a sale to a public utility,” Supervisors Chairman Chuck Wilson said during the Aug. 28 meeting.

“The purchase price Pennsylvania American Water must pay to the Township under the Asset Purchase Agreement is far higher than the PUC’s purchase price standard under its new formula. Although the PUC did recently conditionally accept PAWC’s application to purchase our system, given the new legal framework instituted by the PUC, it is very unlikely the PUC would ultimately approve the sale of our system to PAWC as currently structured,” Wilson said.

“I am asking that an item be placed on the agenda for our next meeting [Sept. 11] to terminate the APA based on this change in law and authorize all necessary actions, including signing the associated termination documentation, to do so. As you know our solicitor, Bob Iannozzi, is on vacation. When he returns, he will address this request.”

The news was greeted by applause from community opponents of the deal who attended the meeting. The four-year effort to sell the system has faced continued resistance from some residents, as well opposition from state organizations opposed to private ownership of public utilities.

The leftwing group Food and Water Watch celebrated the news, and they credited “years of successful organizing by Towamencin Neighbors Opposing Privatization Efforts (NOPE).”

“Clearly, water privatization is unwelcome across Pennsylvania,” said Ginny Marcille-Kerslake, Pennsylvania organizer at Food & Water Watch.

PAW stepped into a deal for the Towamencin Municipal Authority in March 2023 after NextEra Water Pennsylvania abandoned the $115 million agreement to buy the township’s sewer authority.

The sale of the sewer authority was a contentious issue during the 2023 election for supervisors’ seats. Sale-opponent Kofi Osei won a seat on the board in that election.

“I still feel like I’m dreaming with how abrupt it was,” said Osei. “I didn’t have any idea that Supervisor Wilson was going to announce that termination was going to be on the agenda until the words came out of his mouth. The American Water press release was at 7:20 p.m., almost as he was speaking. I am thankful that he came around for whatever the reason, but [I] do wish he chose to listen to the Towamencin residents at any of the points prior when it was clear they didn’t want a sale. The termination will feel very real to me when we take the vote at the next meeting.”

PAW President Justin Lander said his company was “grateful” as well, thanking “the Board of Supervisors for their partnership and the trust they placed in us to address their environmental compliance challenges and much-needed investment in their treatment plant.

“Unfortunately, and upon further review, we both agree the structure of the original deal is unlikely to meet the approval criteria recently established by the PUC. Pennsylvania American Water has a long history of delivering water and wastewater solutions that bring greater value to communities, and we will continue to take that same approach across the commonwealth.”

Residents of a Montgomery County town are claiming victory in a vote to revise their township status and institute “home rule.” It is a measure driven by a bid to prevent the controversial sale of its municipal sewer system.

Unofficial election results released Wednesday show Towamencin Township residents voted in favor of the “home rule charter ballot question,” which will revise Towamencin’s second-class township code and institute the “home rule” charter in question.

The vote was 2,728 in favor and 2,418 against.

Longtime resident Kofi Osei told DVJournal the charter vote came about after the Towamencin Board of Supervisors voted to sell the town’s sewer system to NextEra Energy in May 2022. Residents revolted against the proposal, he said, leading to a major citizen’s commission and Tuesday’s proposal that effectively revokes the town’s sale of the utility.

“We feel pretty comfortable with the lead with 100 percent of precincts reporting,” Osei said Wednesday. “Some provisional and military [ballots are] left, but it should be impossible for those to cover the gap.”

“Next in Towamencin is making sure that the Board of Supervisors follow the charter and exit the contract that they are no longer able to complete,” he said. He added citizens across Pennsylvania will “keep monitoring these sales ..and offer advice to communities that want to fight this.”

Following the proposed sale, Osei said that outraged residents “successfully collected enough signatures to initiate a government study commission question and election that appeared on the November 2022 general election ballot.” The ballot question passed, with members of NOPE winning all seven seats on the commission.

Following public meetings, a draft report from the commission recommended the home rule charter’s inclusion on Tuesday’s primary ballot. The home rule charter will “prohibit the sale or long-term lease of potable water, wastewater, and stormwater systems to nongovernmental entities,” according to the commission’s report. It will also modify local transparency rules and referendum procedures.

Osei said throughout the controversy, the town board of supervisors transferred the sewer asset purchase agreement from NextEra to American Water.

Kara Rahn, a spokeswoman for American Water, did not respond to a query about the vote on Wednesday. Rahn earlier confirmed the company “agreed to assume the obligations under the Towamencin asset purchase agreement on March 23, 2023, after the Board of Supervisors’ public vote on the matter.” The sale was valued at $104 million.

“We do not have any comment on the ballot initiative seeking to change the township’s form of government in the future,” Rahn said.

Towamencin residents for months protested against the proposed sale, one of many transfers of public water systems to private controllers in Pennsylvania in recent years.

Among concerns that drove the backlash to the sewer sale, the commission found the transfer “could cost Towamencin ratepayers about $9 million or more every year in sewer rates in excess of operation and maintenance.”

“That would dwarf the stated $3.5 million a year benefit of having a one-time cash infusion,” the report said, also claiming that “investor-owned wastewater utilities consistently charge double to triple rates as well as having more harsh rate hikes than municipally owned systems.”

Though the charter will outlaw the sale of the water system to private companies, the commission suggested that the new charter still “allow for a lease with a non-governmental entity,” albeit only “for a period of no longer than two years.”

Osei previously told DVJournal that he got involved with the NOPE effort “first and foremost because Towamencin is where I grew up, and I did not want to see my friends and family sold out to some big utility company.”

“The more I read about water/sewer privatization, and specifically the ‘fair market’ valuation method Pennsylvania uses, the less I thought it was a good idea and wanted to make sure the people of Towamencin knew what was going on before they eventually get the bill a few years later,” he said.

Pennsylvania has recently seen a frenzy of sewer system buyouts by private groups. The state legislature in 2016 passed the controversial Act 12, which modified the state’s rules for the valuation and purchase of municipal water systems, allowing private concerns to buy more of them.

Osei said the main purpose of the home rule question on Tuesday’s ballot was to end any talks of selling the township’s sewer system.

“The primary goal of passing this charter is to stop the sewer sale and any future attempted sale,” he said.

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