Legislation could require referendums for public utility sales
KAYLEE LINDENMUTH / SHENANDOAH SENTINEL - The Pennsylvania State Capitol in Harrisburg on March 21, 2023.
HARRISBURG – A bill which will soon be introduced in the state House of Representatives would require the sale of public utilities to be placed on the ballot.
Rep. Liz Hanbidge (D-61/Montgomery County) said in a co-sponsorship memo Thursday that she plans to introduce legislation that would repeal Act 12 of 2016 and require the sale of a public utility be approved by a referendum.
Act 12 amended the process which allows municipalities to sell their public utilities to private companies, which she says “has emboldened municipalities to sell municipal assets to balance budgets or pay for other projects and a process designed to help distressed municipalities has morphed into a form of covert taxation, compounded by the permanent loss of a municipal asset.”
The House Majority Policy Committee had said previously that Act 12, or 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.”
That, however, has not necessarily been the case in the ongoing sale of Shenandoah’s water authority, according to two appraisals done for the regulatory approval process.
One appraisal, requested by Aqua Pennsylvania, one of the largest private water companies in the nation, valued MABS at $25 Million, while another, requested by the borough, placed it at $18 Million
Aqua President Marc 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.
Bainbidge used the sale of Towamencin Township’s sewer authority near Lansdale as an example of uncertainty the sales may cause.
“As a result, my neighbors and constituents are facing years of increased sewer bills and an uncertain future,” Hanbidge said. “I am deeply concerned that the Commonwealth has no mechanism to determine the wishes or opinions of ratepayers and whether they truly want a municipally owned utility sale to occur.
“We need to prioritize the wishes and needs of ratepayers over corporate profits,” Hanbidge added.
Hanbidge described the ramifications of such utility sales as being “drastically increased rates, loss of local autonomy over the utility, poor customer service, and a frustrating lack of system upgrades.”
“Ratepayers are the ones footing the bill,” Hanbidge said. “Whether it is a municipality or a public utility providing the service, ratepayers should be the first people we contact to see what they want and how they want to proceed.”
Hanbidge’s fears are echoed in Shenandoah, where Aqua previously estimated residents could see as high as a 44.87% rate hikes. Lucca told the Sentinel the actual rate increase would likely be lower.
Nearly a dozen spoke at a public input hearing as the Pennsylvania Public Utilities Commission considers the matter, and in a written recommended decision, their input did little to sway the opinion of the presiding judge.
Former MABS chairwoman Donna Gawrylik filed a formal protest, noting that the borough refused to place the matter on the ballot as a referendum, and asked the PUC to either stop the sale or place the matter on the ballot. Her challenge was dismissed by the presiding judge.
As of Thursday, the bill had not yet been introduced.
About Author
