Water is a valuable public asset which should be available to all, not sold to the highest bidder to exploit for profits.
Chester Water Authority
Chester Water Authority (CWA) has long been the target of a hostile takeover attempt by Aqua PA. If this sale ever goes through, CWA's water rates would double. As noted below, the Pennsylvania Supreme Court has put a stop to this attempted sale - at least for now.
CWA is a non-profit public water utility. It is well run. It is physically and financially healthy. The sale of such a public utility like CWA, became possible in 2016 with the passage of Act 12, the so called “Fair Market Value” legislation. Act 12 allows private, for-profit utilities like Aqua to buy healthy public utilities at inflated prices and then recoup the entire cost and reap substantial profits through higher rates. The inflated price of $410 million allowed under Act 12 is the driver behind the proposed sale of CWA to Aqua.
Chester City prominently plays a major role in the attempted sale. Decades of mismanagement have left the city of Chester in bankruptcy and state receivership. The following article provides some background: (LINK).
By selling CWA, the state Receiver believed it could use the sale proceeds to clean up Chester's financial mess. Yet over 80% of CWA ratepayers do not live in the city of Chester. We would have received no benefit, but left to pay the bill.
The concept of selling public utilities to fix previous financial mismanagement is a very controversial issue. Who should pay for the past misdeeds of local politicians? Should it be the customers of CWA? Former Governor Wolf publicly supported this approach, and that is a big part of the reason CWA is under attack. Governor Shapiro has not taken a public position, but it is his Receiver that pursued the sale of CWA - that, alone, speaks volumes.
A fundamental question was whether or not the city of Chester could claim ownership, and thus sell CWA. This led to a complicated legal battle.
CWA Timeline
2017
The CWA Board unanimously rejected Aqua’s $320 million buyout offer.
2019
CWA offered the city of Chester $60 million to help its financial situation in exchange for placing the authority in a trust for 40 years. The city of Chester never responded, yet Aqua jumped in and sued CWA over the offer. At this point, Aqua shifted its tactics to position itself as the savior of the city of Chester.
2020
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Assuming it was the sole owner of CWA, the city of Chester issued a Request for Proposals for the acquisition of the assets of CWA. As a result, Aqua offered over $420 million.
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Governor Wolf placed Chester in receivership due to its financial problems.
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The Common Pleas Court ruled against Chester’s claim of sole ownership and ruled that any sale of CWA requires the approval not only of the city of Chester, but also Chester and Delaware Counties.
2021
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The 2020 court ruling was appealed, and the Commonwealth Court ruled that the city of Chester did have the sole authority to dissolve CWA. The case was returned to the Common Pleas Court to address some specific issues. Importantly, the Court ruling included a very powerful minority dissenting opinion. Both can be read here:
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The Commonwealth Court decision was then appealed to the PA Supreme Court, asking that Court to weigh in on the ownership of CWA.
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The Chester City Council took advantage of the Commonwealth Court ruling and unanimously passed a resolution asking the Receiver to allow them to enter into an Asset Purchase Agreement with Aqua.
2022
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The PA Supreme Court agreed to hear the appeal of the Commonwealth Court Decision.
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Before the Supreme Court could take any action, however, the Receiver applied for bankruptcy in federal court. This action put a stay on any state cases.
2024
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A major issue in the bankruptcy proceeding was whether Chester had the necessary ownership to sell CWA. There was a lot of litigation on that issue. Finally, the bankruptcy court conceded that it did not have jurisdiction over that issue and allowed the PA Supreme Court action to proceed.
2025
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One fallout of the bankruptcy threat was that CWA lost its ability to borrow money at favorable muni-bond rates. The possibility that the city of Chester could default on a bond essentially destroyed CWA's credit rating. Unfortunately, CWA needed to re-finance some maturing bonds and had to pay exorbitant interest rates. That alone required a 14% rate increase. The following is CWA's notice informing rate payers:
2026
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The PA Supreme Court ruled that the city of Chester did NOT have the authority to sell CWA without the concurrence of the Counties of Chester and Delaware - which were opposed to the sale. The court decision included both majority and minority opinions. Both can be read here:
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That stopped cold the attempted sale of CWA via bankruptcy.
What’s Next
The Supreme Court decision will not be the final word for Big Water's craving to acquire CWA. CWA would be a trophy property for them. It would be an instant profit maker. Their likely approach will be political at the Chester County and Delaware County level. They will try to get those jurisdictions to appoint CWA board members that will support a sale. To prevent that, CWA's independence needs to be made a major issue in those local elections.
The other avenue is state legislation to protect the utility ratepayer. Multiple bills are generally introduced in every session of the legislature, but they die in committee. Some individual state Representatives and Senators support such legislation, but party leaders will not touch it. Big Water's political lobby power is very effective at keeping any reform legislative bottled up.
What can you do?
Large private utility companies continue to spend millions lobbying in Harrisburg. The fruits of their efforts are seen in Act 12. We cannot fight them with money, but politicians need our votes more than they need their money. They need to know these issues are important to us. We can only make a difference if large numbers of citizens speak out.
Residents of New Garden Township can help by writing or calling our representatives to thank them for their support, and by contacting Governor Shapiro asking him to publicly support the repeal of Act 12. Encourage him to take a public stand against the sale of CWA because of the unfair burden it places on his constituents. Sample letters can be found here: LINK
If you do not reside in New Garden Township you can find information about your representative here: LINK