As regulators mull MABS sale, lawmakers discuss negatives of water authority sales statewide
COLERAIN TOWNSHIP, Lancaster County – As regulators consider the sale of Shenandoah’s water authority, state lawmakers held a roundtable regarding the negative impacts of such sales.
Shenandoah has agreed to sell the Municipal Authority of the Borough of Shenandoah (MABS) to Aqua Pennsylvania for $12.5 Million, a sale which is seeking Public Utilities Commission approval.
The former chairwoman of the authority, and at least a dozen others, contend the sale would harm residents and that the authority is financially solvent, while the borough and Aqua contend the borough would benefit from improved service, infrastructure improvements, among others.
Thursday’s roundtable in Colerain Township, about 15 miles southeast of Lancaster, focused on the proposed sale of the Chester Water Authority, which serves the City of Chester in Delaware County and 36 other municipalities. That sale, also to Aqua, is held up in the state Supreme Court.
“The sale of this public water authority is bad news for any resident of Pennsylvania who values their ability to access clean water and open green spaces,” said state Rep. Carol Kazeem, who hosted the event and represents portions of Delaware County – including the city of Chester. “For the more than 200,000 paying customers of Chester Water Authority, this sale could result in skyrocketing rate hikes.”
Kazeem’s fear is echoed in Shenandoah, where Aqua, one of the largest private water companies in the nation, estimated residents could see as high as a 44.87% rate hikes. Aqua President Marc Lucca told the Sentinel the actual rate increase would likely be lower.
Chester City Council, facing massive budget deficits and the prospect of bankruptcy, voted unanimously in September to approve a $410 Million sale to Aqua. The CWA and residents oppose the sale and filed an appeal with the Pennsylvania Supreme Court.
The committee met at the CWA’s Octoraro Reservoir in Colerain Township in southeastern Lancaster County. The committee heard reasons behind why the city’s move to monetize the CWA will not resolve Chester’s financial issues and only places an undue burden on customers to pay higher rates.
“The people of Chester and its surrounding communities have every right to question the potential sale of the Chester Water Authority,” said Rep. Christina Sappey, who represents portions of Chester County. “Everyone is aware the city faces a sizable deficit, but the short-sighted move of selling a water utility to a for-profit company almost always ends poorly for residents – in the form of higher bills with no end in sight for price increases. The sale might solve the city’s problems today but create new problems down the road.”
The CWA, founded more than 75 years ago, serves large portions of the communities in southern Chester County and western Delaware County. It serves more than 200,000 residents across 37 municipalities.
Thursday’s roundtable included a discussion with Chester Water Authority Director of Plant Operations Stephen McBryde; CWA Executive Manager Dave Krupiak; and Save Chester Water Authority Executive Director Catherine Miller. The committee also talked with ratepayers, CWA employees, and Pennsylvania Municipal Authorities Association Senior Director of Government Relations Jennie Shade.
Kazeem also feared access to the popular Octoraro Reservoir would be restricted under private ownership.
“People who enjoy the outdoors can also expect access to the 2,000 acres of land currently owned by Chester Water Authority to change dramatically – including access for boaters, hikers and anglers,” Kazeem added. “The bottom line is the only one who benefits from this sale is the for-profit company trying to purchase Chester Water Authority.”
Currently, the majority of MABS land is posted no trespassing, though the authority has previously issued permits for hunting on its properties. The Raven Run reservoirs have also been a typical location for Shenandoah Valley High School class photos for the yearbook.
The committee says state law allows the sale of municipal water authorities, and says a law passed in 2016 — HB 1326 — allows private companies to purchase municipal water authorities for more than they are worth, “which caused communities facing economic distress to accept sales that would have short-term benefits but potentially long-term consequences.”
Shenandoah’s water authority, however, is not being purchased for more than it is worth, according to two appraisals done for the regulatory approval process.
One appraisal, requested by Aqua, valued MABS at $25 Million, while another, requested by the borough, placed it at $18 Million
Lucca told the Sentinel the two bids received for the MABS system — both around $10 to $12 Million — were more indicative of what the authority was worth.
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