Water, water is everywhere. It takes the work of experts to make it drinkable.
This is why water and sanitation authorities are so important. They provide clean water to homes and businesses and discharge wastewater for treatment, services most Americans take for granted.
You are valuable too.
The Bucks County Water and Sanitation Agency, which serves 100,000 homes in Bucks and adjacent counties, is one of the largest in the state and was recently valued at more than $1 billion: $1.1 billion for the sewer system and $300 million for its water system, said John Cordisco, BCWSA’s chief executive officer.
Still, late last week, Cordisco denied rumors the agency was for sale, despite offers to buy it from water utility giant Aqua for $600 million and American Water for an undisclosed amount, and a lease from an investment group called Bernhard Capital of Baton Rouge, Louisiana Partners.
Benjamin Jones, CEO of the Doylestown Township-based water authority, also confirmed that no sale was planned. “There is absolutely no decision on a potential sale,” he said.
Cordisco, who is also chair of the Bucks County Democratic Committee and Bucks County representative on the SEPTA board, said the BCWSA has a fiduciary responsibility to Bucks County to review the bids. If the agency’s system were sold or leased, the proceeds would go to the county.
“[Bucks County]commissioners have not received any information from the BCWSA on this issue,” county spokesman James O’Malley said when asked to comment on a possible agency sale.
Because utility agencies are established under state law, the Pennsylvania Public Utility Commission oversees them. PUC spokesman Nils Hagen-Fredericksen said it was “inappropriate for the Commission to speculate on possible future transactions involving BCWSA”.
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Why are water and sanitation authorities so valuable?
In 2016, Governor Tom Wolf signed Act 12 into law, making water and wastewater treatment plants popular investments. It provided that water treatment agencies could be valued at “fair market value” for rating purposes, making them a more attractive purchase for private utilities than if their value for rating was based on the original cost written off.
Daniel Gerrity, chief executive of Bernhard’s infrastructure fund, said large private utilities are entering this new frontier, which he likened to the “wild, wild west.” It could help drive the regionalization of water utility services so small utilities aren’t left with outdated systems that feepayers can’t afford to fix, but Gerrity said Pennsylvania doesn’t have the laws governing those transactions that New Jersey does , to ensure the fee payers do not pay higher bills.
Cordisco said it’s a complicated process to evaluate a water and sanitation agency, especially one with as many assets as the BCWSA. In addition to Bucks, it serves communities in Chester and Montgomery counties and provides some sewerage services in Philadelphia. The agency needs to look at their rate structure and negotiate how a prospective owner or tenant would honor contracts with existing customers and employees.
However, some people worry that these transactions will leave fee-payers with higher utility bills, particularly when a system is sold to a private utility that also has to be accountable to its shareholders.
Among them is former Middletown supervisor Tom Tosti. Tosti was on the podium at last month’s Middletown manager’s meeting as a private, but one who leads the chapter of the American Federation of State and Municipal Employees.
He urged the community to pass a resolution asking Bucks County commissioners not to approve a sale of BCWSA to Aqua, the large private water utility headquartered in Bryn Mawr. Aqua is part of Essential Utilities, which describes itself on its website as “one of the largest publicly traded water, wastewater and natural gas utilities in the United States.”
Calling the potential sale “the largest of any water agency in the country,” Tosti said selling a public agency to a private company “usually does far more harm than good,” with job losses and higher service fees. And local residents lose the right to be heard when decisions are made.
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What would a sale of BCWSA mean?
The Bucks County Water and Sanitation Authority was established in 1962 as an independent agency to serve the water and sanitation needs of Bucks County communities. it doesn’t depend on taxpayers to fund its operations. “There is no taxpayer money involved in keeping an agency running. Instead, all revenue comes from user payments and from customers using and paying for our services,” the BCWSA explains on its website.
But while no taxpayer money will be used, should the agency be sold or leased from a private utility, the proceeds from that transaction would go to Bucks County and could be used to offset any tax increases, Cordisco said.
Last fall, the county signed an agreement to provide Lake Galena water to BCWSA for $24.7 million to increase the agency’s supply.
Gerrity said his company had put forward a lease proposal that would allow the county to retain ownership of the agency and keep unionized employees.
He produced a copy of Bernhard’s offer, which included $245 million to pay off all debt, a $190 million upfront payment, a total capital investment of $685 million, and an operations and maintenance investment of $2.4 billion US dollar with annual rate increases of 2% against a 30 year term.
In a letter to the agency, he said, “Our partnership model offers a significant infusion of upfront capital, typically equal to or greater than what private companies have offered to buy the entire system and privatize the system.” said at the end of the lease, BCWSA would still retain ownership of its assets.
Peter Lachance, a Lower Makefield resident who protested the recent sale of that community’s sewage system to Aqua for $53 million, and a friend of Gerrity’s, said selling a water and/or sewage system is not as controlled in Pennsylvania How government agencies follow the bidding process for the purchase or sale of most other services.
“We don’t have to make bids … They have a fiduciary responsibility to evaluate payers so they’re doing the right thing and giving them the best deal,” he said.
The BCWSA itself has acquired many smaller municipal utilities across the region in recent years, including last month’s $50 million purchase of the Bristol Borough Water and Sewer Authority. As part of the negotiations, she promised Bristol not to increase tariffs for three years and to keep the employees. Council President Ralph DiGuiseppe said Wednesday he didn’t know the BCWSA could be sold.
Cordisco said that Bristol’s compliance with its rates and employee retention are the types of issues that would play a role in negotiations with any company wishing to buy or lease the BCWSA and that the agency still has many factors to assess made before decisions were made.
He stressed that no decision had yet been made as to what to do with the esteemed authority. “Everything we do will be transparent and open,” Cordisco said.
Kara Rahn, a senior government affairs manager at Pennsylvania American Water, said she could not comment on a general or specific business development plan for the company.
Aqua spokeswoman Sarah Courtright said: “Aqua is always interested in being a solution for communities and their customers, but we are not commenting on specific possibilities.”
Reporter Chris Ullery contributed to this story.