Water and sewer utility privatization reform bills move toward a vote in Pa. House

Legislation to protect consumers from triple-digit rate hikes when public water and sewer companies are privatized advanced toward a vote in the Pennsylvania House on Tuesday.

The House Consumer Protection, Technology, and Utilities Committee passed a slate of bills that would require utility companies to use lower valuations for newly purchased water and sewer systems when seeking rate increases, spread the impact over a longer period and improve transparency of the process. 

Each of the four bills in the package passed with unanimous approval from Democratic members and split votes among Republicans.

Committee Chairperson Robert Matzie (D-Beaver) said the opposition is a result of lawmakers doing what they believe is right for their constituents. He added that the Pennsylvania Chamber of Business and Industry and the Pennsylvania State Association of Boroughs have taken a position against the bills.

“I anticipate a floor vote sooner rather than later. And I do think we’ll get it over the finish line in the House. Now the Senate’s another story, but I think that public pressure is really there,” Matzie said.

Rep. Jim Marshall (R-Beaver) said he opposed the bills because he believes they require further refinement including a more flexible method for determining the values of troubled utilities.

Ratepayers across Pennsylvania have been hit with skyrocketing water and sewer bills after their municipal utilities were purchased by investor-owned companies including Aqua PA and Pennsylvania American Water.

The hikes are the result of unintended consequences of a 2016 law designed to encourage for-profit utility companies to acquire and invest in struggling municipal water and sewer utilities.

The law allows municipal water and sewer utilities to negotiate with for-profit utilities for the fair market value rather than the actual value of the system. The higher purchase prices, in turn, give new owners a basis to seek approval to charge higher rates, which they usually receive, consumer advocates testified in a December hearing on the legislation.

Investor-owned companies, have purchased 22 municipal utilities under the new valuation method and won rate increases ranging from 44% to 166%, according to the Pennsylvania Public Utilities Commission.

Aqua Pennsylvania President Marc Lucca told committee members during the December hearing that rate increases are necessary because the systems the company is purchasing often have years of deferred maintenance that must be dealt with.