Sometimes public water systems sell their systems with the expectation that a private company will continue to deliver clean, reliable, and affordable water to their consumers. However, privatization usually brings increased water rates for ratepayers who had little to no voice in the sale. Pennsylvania is ground zero in this battle over who will own our water systems.
In 2016, Pennsylvania adopted fair market value legislation (Act 12) allowing municipal water and sewer systems to be sold at prices determined by independent appraisals and not by the book or depreciated value – Read our blog “What is Fair Market Value Legislation?” for more on this! According to our partner Food and Water Watch, since Act 12 was implemented, more than 30 water systems have been sold to private companies in Pennsylvania, affecting thousands of consumers. This does not include the nearly dozen other municipalities that are currently considering enticing privatization offers from large corporations, according to the Pennsylvania Municipal Authorities Association.
The biggest impact for consumers is skyrocketing water rates. In fact, it is estimated that the increase in private water takeovers across Pennsylvania has led to ratepayers paying $70 to $85 million more annually on their water bills. Not to mention, pending acquisitions could nearly double that figure, with ratepayers suffering the ultimate burden. Community advocates from Pennsylvania are stepping up and challenging private acquisition of water systems, especially after their rates increased with little to no improvements in infrastructure or service. For example, in New Garden Township, Aqua Pennsylvania, a subsidiary of Aqua America, purchased the wastewater system for $29.5 million in 2020. From this sale, concerned citizens of New Garden came together to form Keep Water Affordable, a sponsored project of Freshwater Future that is advocating for Act 12 reform legislation in the Pennsylvania legislature and ensuring the public has a voice in decision making processes when their water system is under threat of privatization.
New Garden residents and the advocates at Keep Water Affordable were told by Aqua there would be a 78% rate increase to fund the nearly $12 million of infrastructure improvements that the water system reportedly needed, yet after the initial acquisition, their rates have gone up 85% with no known infrastructure improvements to the water system. Ever since, Keep Water Affordable has been hard at work to raise awareness surrounding water privatization in the Great Lakes region. New Garden is just one example of how consumers bear the brunt of increased rates under fair market value legislation that allows private utilities the ability and incentive to purchase municipal systems. Fair market value legislation is affecting a variety of states in the Great Lakes region and our next blog post will take a more in-depth look at how the legislation is transforming water systems across the nation.
