Today, more than 20 groups and hundreds of Pennsylvania residents sent in public comments asking the Pennsylvania Public Utility Commission to end predatory water system pricing. 

The Pennsylvania Public Utility Commission (PUC) has proposed changes to how it implements Act 12 of 2016, a state law that opened the floodgates on water and sewer privatization in the state by allowing predatory pricing of municipal systems and excessive rate hikes afterwards. Act 12 allows water corporations to recover the cost of inflated acquisition prices through rates. 

The PUC has proposed a reasonableness review ratio to serve as a guide post to evaluate purchase prices of water and sewer systems that are marked above their book value. The expected initial ratio is 1.68, effectively indicating that the PUC believes it is reasonable to buy a system marked up by 68 percent over the book value. 

The groups asked the PUC to mandate a reasonableness ratio of 1.0 to stop predatory water system pricing and prevent the most excessive rate hikes. In allowing inflated acquisition prices, Act 12 incentivized the sale of healthy municipal utilities, as sales are driven by large purchase prices — not system improvements. Notably, none of the 22 sales under Act 12 involved a distressed utility. 

“Because of the large sale prices allowed by Act 12, municipalities have been incentivized to sell healthy well-run utilities,” said Peter Mrozinski, co-founder of Keep Water Affordable. “The condition of the utility and the community’s ability to support it become secondary issues at best. The public is too often misled with incomplete and vague information.  Although only a repeal of Act 12 can fix this problem, the PUC’s proposed changes are a step in the right direction. But they do not go far enough. Open public engagement throughout, with total transparency and quantifiable, detailed justification proving a net benefit must be required.” 

The PUC has also proposed improved public notices of rate impacts and two public meetings prior to executing a sale contract. Advocates have called that an improvement but insufficient, and urge meaningful changes to improve transparency. This includes barring nondisclosure agreements that tie the hands of local governments to discuss a potential sale with their residents.

“Public opposition is growing against predatory water system pricing and the high cost of water and sewer privatization in Pennsylvania,” said Ginny Marcille-Kerslake, Eastern Pennsylvania Organizer with Food & Water Watch. “While regulators are responding to this public outrage, the proposed measures lack teeth. Only outright repeal of Act 12 will begin to provide any relief to the Pennsylvnians suffering from the rate gouging from the big water corporations.” 

The public comments indicate strong support for state legislation to fully repeal Act 12 of 2016 as necessary to protect the public from predatory water system pricing. 

“Water is critical to life and municipal water systems have been built by community members over many decades in order to provide this critical resource. These vital systems need to be kept in public hands and predatory and behind-closed door negotiations must not be allowed,” said Jill Ryan, Executive Director of Freshwater Future.

The group public comment was signed by 22 organizations, including AFSCME District Council 88; Bucks Environmental Action; Chester Residents Concerned for Quality Living; Concerned Citizens with PAW; Corporate Accountability; Food & Water Watch; For Love of Water (FLOW); Freshwater Future; In the Public Interest; Keep Water Affordable; NOPE (Neighbors Opposing Privatization Efforts); Safety, Agriculture, Villages, & Environment (S.A.V.E.); Save CWA; and Sisters of the Blessed Sacrament. 

A similar public comment was signed by more than 400 individuals from Pennsylvania. A separate public comment was submitted by nearly 100 New Garden Township residents to document their experience as the guinea pigs of Act 12, which resulted in a 90% rate increase to cover only Aqua’s investment in buying their sewer system. Aqua will seek additional rate increases to pay for any capital improvements.

The public comment deadline is today at 4:30 PM. More about Act 12 is available at www.keepwateraffordable.org

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