Municipalities launch protests against York City wastewater treatment system sale
Five municipalities have filed protests against the sale of York's wastewater treatment system, alleging the deal is inherently flawed and will increase rates.
Five townships, which form the York Area Regional Sewer Authority, join another protest filed by the state Office of Consumer Advocate with the Public Utility Commission over the $235 million sale of the system to Pennsylvania American Water Co.
The authority includes West Manchester, Manchester, Spring Garden and York townships as well as North York borough.
Although city officials have said the sale will relieve a $14 million budget deficit caused by skyrocketing pension and health care costs, the other municipalities have opposed the sale from the beginning.
“We’re going to do everything we can to protect our ratepayers,” said Tim James, manager of Manchester Township. “And this is a part of that process.”
West York, which also uses the system, is not a member of the authority.
York Water Co., which owns West York's wastewater system, did not respond to requests for comment.
Laura Martin, spokesperson for Pennsylvania American Water Co., said it would be "premature" to comment on the protests because the PUC has yet to accept the company's acquisition application and set deadlines to receive protests and comments.
In the protests dated July 19, the municipalities particularly take issue with the fact the company, in its application, states it wishes to modify the existing intermunicipal agreement the municipalities have with the city.
The main issue, they say, is that the intermunicipal agreement would no longer be in effect if the company took ownership of the system from the city.
Instead, an entirely separate agreement between the company and the municipalities would need to be drafted and agreed upon.
"Absent a new agreement, the Application is irreparably defective. By its own terms, the Application is premised on a valuation that assumes a revenue stream that is not provided for by any agreement or otherwise," the protests state.
In addition, the proposed transaction will "undoubtedly" result in rate increases, according to the protests.
The municipalities' protests come on top of a protest filed by the state Office of Consumer Advocate on Friday, where the agency requested that the PUC allow it to investigate whether the proposed rates are fair before it makes a decision.
Protests from the agency are common for deals such as the wastewater system sale, said Christine Hoover, the agency's interim consumer advocate.
Pennsylvania American Water Co. estimates an increase of 47.5%, or $15.48 per month, for York City sewer customers once a new rate base is established by the PUC. That means the current average rate of $32.60 per month would increase to $48.08.
While the contract includes a three-year moratorium on rate hikes for York City residents, the remaining municipalities would have to negotiate with the company to set their rates.
"The impact that the associated costs will have on the rates of existing and acquired customers must be determined to assess the benefits and detriments of the acquisition," the protest states.
Both the municipalities' protests and the agency's protest also request that the PUC hold public hearings before approving the sale.
After a protest is filed, the PUC refers the case to an administrative law judge, Hoover said. It could be months before the judge makes a recommendation on whether the sale should be approved.
The cases would be considered during the PUC's six-month review period of Pennsylvania American Water Co.'s application, which begins once the application is formally accepted.
The agency is actively reviewing the application, said PUC spokesperson Nils Hagen-Frederiksen. It is unclear when it will make a decision on whether to accept it.
— Logan Hullinger can be reached at email@example.com or via Twitter at @LoganHullYD.