Yesterday, Sen. John Kane introduced SB 866 to repeal Act 12 of 2016, which created a predatory pricing mechanism for water and sewer system privatizations. The legislation will help keep water and sewer services affordable.
Under Act 12, large water corporations use outside consultants to inflate the value of the water or sewer system they are acquiring, and then recover that amount along with investor returns by raising customer water and sewer rates. This law had the dual effect of making it more profitable for companies to buy local systems and making it easier to entice local governments to sell them. Both the seller and buyer push for higher and higher purchase prices, and Pennsylvania residents and businesses have been forced to pick up the check.
Household water and sewer bills have skyrocketed for affected customers. According to an analysis by Keep Water Affordable, formed by affected New Garden Township residents, since the Act 12 acquisition, household sewer bills following Act 12 sales have increased significantly, from 73 percent in East Norriton to 170 percent in Exeter, Pennsylvania.
“Repealing Act 12 will be the first step in resolving our billing issues in Exeter Township and will hopefully halt further sales which are set to drive rates up by at least 10%,” said Amanda Johnsen, a resident of Exeter Township, Pa, and founder of Exeter Twp – Water Issues Facebook Group. “Residents are currently seeing bills between $250 to $650 for the month of June (2023), a 35-day billing cycle which many were unaware of and unprepared for.”
“American Water charges triple the sewer rates of Towamencin without doing triple the amount of work. All of the systems purchased under this law have not been distressed and often have been purchased directly at odds with the will of ratepayers. It is clear that Act 12 does nothing more than enable corporate rent seeking off of the backs of hard working Pennsylvanians and needs to be repealed,” said Kofi Osei, resident of Towamencin Township and founder of Towamencin Neighbors Opposing Privatization Efforts.
“Water privatization has been shown to be a terrible deal for workers, families and the municipalities that are being targeted for corporate takeover,” said Food & Water Watch Eastern Pennsylvania organizer Ginny Marcille-Kerslake. “Act 12 has supercharged these corporate rip offs, which have caused water rates to skyrocket and robbed local communities of their control over valuable public assets. Senator Kane’s bill is an essential step to prevent more corporate water takeovers in Pennsylvania.”
“The disastrous effects of Act 12 are becoming increasingly clear,” noted Noel Brandon, Chairman of the Chester Water Authority. “As more and more public utilities are being acquired by private for-profit companies, the financial burden on ratepayers is only going to get worse. I commend Senator Kane for his leadership in introducing Senate Bill 866. Senator Kane understands the financial crisis that Act 12 is causing for communities across Pennsylvania, and he is taking appropriate action to protect ratepayers. I, along with many of our ratepayers who have spoken out about Act 12, are certainly urging the General Assembly to pass Senate Bill 866 and repeal Act 12. This is the only way to ensure that public utilities remain in public hands and that ratepayers are not subjected to unfair and unreasonable financial burdens.”
“Act 12 must be repealed,” said Bill Ferguson, a resident of New Garden Township, Pa., and cofounder of KWA – Keep Water Affordable. “Its main impacts have been to increase the profits of the water companies and tempt elected officials to privatize. As a result, many ratepayers, including New Garden Township residents, have experienced rate shock. These excessive rate hikes are sucking wealth out of the pockets of Pennsylvanians.”
“New Garden Township was the guinea pig of Act 12,” said Peter Mrozinsi, a resident of New Garden Township, Pa., and cofounder of KWA- Keep Water Affordable. “In 2016 Aqua agreed to pay our town $29.5 million for our sewer system; it was the first privatization deal signed under Act 12. What we witnessed during and after this sale is a warning for other communities. Promised rate freezes were removed last minute, and typical households have seen their sewer bills more than double. We strongly believe the repeal of Act 12 and local control of our water and wastewater assets is critical for safety and affordability.”
“Act 12 is simply a bad piece of legislation. It was written by Big Water lobbyists for the benefit of the for-profit water industry. Legislation already exists, and will continue to exist with the repeal of Act 12, that supports distressed water/wastewater systems. Senator Kane, a former union member who represents a large number of Chester Water Authority customers, has been a steadfast supporter of ratepayers and workers. We applaud Senate Bill 866. Senator Kane is a true champion for public water and wastewater. He is a champion of the people,” said Frank Catania, Esq., Chester Water Authority Solicitor.