Directory | My Site

Website Structure

Here are links to all the topics covered on this website

Recent Site Additions: (LINK)

The Basics

A page summarizing the fundamental issues (LINK). The topics covered are:

#1 - Water - a universal need

#2 - Supply options

#3 - A natural monopoly

#4 - For-Profit versus non-profit

#5 - Privatization of public systems

#6 - Fair Market Value

#7 - Website purpose

The Playbook

When a municipality and Big Water are cooking up a deal, there are a number of common themes that play out. We call it the "Playbook" (LINK). The elements include:

#1 - The "Big Picture" - five charts summarizing what is going on (LINK).

#2 - A suitcase of money (LINK). Lots of money. Supposedly "Free Money". We sometimes call this the irresistible "candy jar" offer.

#3 - The suggestion that a municipality should not be in the utility business - leave it to the "pros" (LINK).

#4 - Claims that the system is "falling apart" and needs Big Water to fix it (LINK).

#5 - Without a sale, a huge rate increase will be needed (LINK).

#6 - Big Water can supposedly do it cheaper (LINK).

#7 - There may be a promise of a rate cap for some period of time (LINK). But, beware what happens when that rate cap expires (LINK).

#8 - There may be a promise to set up a rate increase mitigation fund (LINK). New Garden made this promise multiple times in writing, but ultimately declined to do it (LINK)

#9 - The above items are "what" happens. Here is a "Roadmap" about "how" it happens (LINK)

Legislation in Pennsylvania

Since 2012 Pennsylvania has passed two major pieces of legislation favorable to Big Water acquiring municipal water and sewer utilities (LINK).

Act 11 in 2012 (LINK). This allows Big Water to move some costs between systems. It has been used to soften "Rate Shock" after a system has been sold. This is often a "Beggar Thy Neighbor" situation (LINK)

Act 12 in 2016 (LINK). This is Pennsylvania's version of Fair Market Value. We have also put together a bit of history on the passage of Act 12.

PA legislature - There is activity in the PA legislature to repeal or limit Act 12.Here is a link to specific bills that have been introduced: (LINK). The Senate Democrat Policy Committee held a hear on January 22, 2024 to consider repeal or modification of Act 12. Two co-founders of Keep Water Affordable testified at the hearing. Full details here: (LINK).

Big Water in Pennsylvania

Here is a profile of Aqua and American in PA (LINK).

Both companies are open and explicit about their growth strategy (LINK).

The non-profit organization "In The Public Interest" has published a study on privatization of water and sewer systems in Pennsylvania called "Water Wars In Pennsylvania - How Corporations Play The Long Game". It is excellent. Check it out here: (LINK).

For-profit water and sewer utilities are natural monopolies. As such, they are regulated by the Pennsylvania Public Utility Commission (PUC). If they want to raise rates, there is a formal process they must go through. Here is a summary of that process: (LINK).

Aqua is just finishing a rate increase process. Here is a page summarizing some of the key issues and resulting rate increases: (LINK).

The differences between for-profit and non-profit

The economic differences between a for-profit utility company and a non-profit municipal utility are striking. The following pages try to illustrate the differences without getting into too much financial mumbo jumbo.

#1 - Here is a place to start. It covers many aspects of the issue and links to most of the items below (LINK)

#2 - Direct comparison of for-profit versus non-profit (LINK).

#3 - When a municipal utility wants to sell itself to a Big Water company, it should ask itself: What is the next best alternative? If that is done objectively, we think they will find there is actually a better alternative - at least better for their constituents. Learn more here (LINK).

#4 - Depreciation. This is a major difference between for-profit and non-profit utilities. It is also a difficult to understand subject. This page tries to make it clear:

#5 - Interest cost (LINK). This is actually a plea for help. Interest is a major cost for Big Water utilities in Pennsylvania - and ratepayers pay the full cost. Yet there is a PA Supreme Court ruling that says interest is not an allowable cost. Is there a legal basis to charge ratepayers with interest costs?

Our New Garden Experience

Our sewer system was the first one sold under Fair Market Value in Pennsylvania. We think we were sold a very bad deal. The main driver seemed to the the $29.5 million purchase price, which was going to do wonderful things for New Garden. But, we think, things turned out very differently.

There are a number of elements to this story. The items noted below are the key events in the sale process and subsequent rate increases.

#1 - To start, here is a summary of the sale process (LINK)

#2 - A key justification for the sales was the claim that the system was falling apart and a huge investment would be required to fix it (LINK). The link pretty well debunks that claim.

#3 - The follow on to the claim that the system was falling apart was the claim that without a sale an almost 80% rate increase was needed to finance the repairs (LINK). Again, that claim is pretty well debunked.

#4 - The buyer's promise and later taking away of a ten year rate cap (LINK). In retrospect that would have been an attractive part of the deal. However, before the deal closed, that rate cap was taken away for very questionable reasons.

#5 - A three step, 30% rate increase in the middle of the sale process (LINK). The reasons for this increase are questionable

#6 - New Garden and Aqua executed the sale in December-2020. Aqua later filed for a rate increase that went into effect May-2022. When New Garden residents received their first bills with the full impact of the rate increase, the increases ranged from 21% to as much as 124%. The average was about 85%. Needless to say, there was a lot of "rate shock". Here is the full story (LINK).

#7 - When we were hit with big rate increases in 2022, we pressed New Garden for answers on the above issues. New Garden agreed to hold a special meeting on the issue. We think it was a total fiasco. Here is the story (LINK)

#8 - Multiple times New Garden residents were promised in writing that some of the sewer sale funds would be used to mitigate against rate increases over and above the promised rate cap. That never came to pass. The full story is told here (LINK).

#9 - The role of trucking wastewater (LINK). An element of the "falling apart" claim was a real capacity issue at one of the treatment facilities. That facility could not dispose of all the waster water being sent to it. There was a very cost effective solution available, but New Garden did not implement it. Rather they decided to truck the excess waste water from one location to another. That was expensive and went on for five years.

Other Odds & Ends

Opposing privatization of your system (LINK). Act early!

About us (LINK).

Chester Water Authority (CWA) - This is our water supplier in New Garden Township. It is the target of a privatization attempt by Aqua Pennsylvania. We like CWA the way it is. Here is some background on the takeover attempt: (LINK)

Links to other useful websites (LINK).

The following are links to every website page

Listed Alphabetically

2018 Rate Increase - The story of a questionable rate increase by New Garden

2022 rate increase - How Aqua's rate increase impacted New Garden Customers

Act 11 - Summary of the tool used to move sewer costs to water customers

Act 12 - The PA law that enables inflated sales prices for municipal water and sewer utilities

After The Rate Cap - If you are promised a rate cap, what happens when it expires

Aqua 2024 Rate Increase - The major issues and outcomes of the rate case

Beggar Thy Neighbor - i.e. how to get someone else to pay for what you want

Big Picture - Five charts on Act 12 acquisitions

Big Water Profits - Big Water profits in PA and other states