PUC I&E: Shenandoah should bear costs of missing easements so Aqua’s 448k ratepayers aren’t ‘burdened’
I&E also wants Aqua, not Shenandoah, to get cell tower revenues
SHENANDOAH – In testimony filed Thursday, a member of the Public Utilities Commission’s Bureau of Investigation and Enforcement (I&E) says Shenandoah should pay costs of any missing easements “so that Aqua’s ratepayers are not burdened with those costs.”
Aqua Pennsylvania is one of the largest private water companies in the United States with about 448,000 customers across 32 counties, while Shenandoah had a population of 4,249 at the 2020 census.
Shenandoah approved selling the Municipal Authority of the Borough of Shenandoah (MABS) to Aqua for $12.5 Million in 2020.
The testimony was made by D. C. Patel, a Fixed Utility Financial Analyst, on behalf of the I&E, which is recommending conditional approval of the sale.
Patel said that the process to identify all property, easements, and rights-of-way necessary for the water system is still ongoing, and, as of January, there was “no indication of any problematic easements.”
“Additionally, Shenandoah expects to transfer all missing easements, leases, and rights-of-way necessary and essential for the operation of the water system to Aqua at the time of closing,” Patel told the commission.
Patel cited a worry that missing easements and property values would undermine the appraisals performed for the sale, which both came in at nearly $10 Million or more above the negotiated purchase price of $12.5 Million. Those valuations have generally been placed aside in favor of the negotiated purchase price.
Patel said he recommends that the closing of the sale be held up unless and until Shenandoah had provided all missing easements and taken any and all necessary actions to obtain those missing easements. He also said Shenandoah, not Aqua, should bear all costs and expenses for obtaining those missing easements “so that Aqua’s ratepayers are not burdened with those costs,” despite Aqua ratepayers outnumbering Shenandoah residents by a factor of 100 to 1.
Nearly half of the $12.5 Million will go towards MABS debt at the sale’s closure, as well.
Cell Tower Revenue
Another member of the I&E wants Aqua, not Shenandoah, to keep all of the revenues from the cell tower lease on the Turkey Run water tower.
Under the purchase agreement, Shenandoah would keep all revenues from that lease for the first five years after closing, then the first $10,000 for the next five years, with Aqua keep all revenues thereafter.
Esyan A. Sakaya, a Fixed Utility Valuation Engineer, said that, since the revenue would be generated from property owned entirely by Aqua, “it is reasonable that Aqua retain 100% of the cell tower revenue from the date of the [sale.]”
Sakaya also said “the revenue should accrue to the benefit of MABS customers as it is generated through plant that those customers pay for in their rates,” saying that taking the revenue from the borough, generated in the borough, would help “to mitigate future rate increase requirements.”
Sakaya said that the I&E’s overall recommendation is for the PUC to approve Aqua’s application.
Negative Impacts Feared
Residents have voiced concerns of negative impacts to the borough and MABS customers throughout the regulator approval process, including nearly a dozen people at a public input hearing last month.
“Shenandoah’s getting taken [advantage of],” Mike Uholik told the PUC. “Aqua knows what this land is worth, what the water dams are worth. That’s why they have lawyers.”
Joe Boris said then that, while rate increases are to be expected, sale or no sale, the borough will lose local control of its rate increases in the sale.
In an objection to a proposed settlement in the sale proceedings, Donna Gawrylik said the water authority was solvent and that rate increases would be “deleterious” to residents, especially the region’s elderly.
“Here, the Borough of Shenandoah residents will not benefit as the Water Authority is fully functioning and providing water at reasonable rates to the Borough residents,” the objection states, adding that rates could be hiked as much as 44.87%. “As the majority of Shenandoah residents are elderly and on a fixed income, this increase would be very deleterious to them.”
The Greater Shenandoah area’s first responders will also have to pay a water bill under Aqua’s ownership at their next rate case, though the Office of Consumer Advocate, which is intended to represent the interests of Pennsylvania utility consumers, wants the volunteers to pay sooner.
The OCA objected to Aqua’s plan to delay billing the fire companies and Shenandoah Ambulance until the next rate case, claiming that the practice, benefiting volunteers who have battled five fires, including a major blaze at Dollar General this year, would cause “harm.”
Locally, the Hazleton City Authority and the Mahanoy Township Authority both told the Sentinel that they charge fire companies in their service territories for water service. The Schuylkill County Municipal Authority said they only charge each fire company in their service area the minimum charge of $19.65 per month.
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