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Big Water Friendly Legislation

Big Water companies spend millions of dollars annually lobbying Pennsylvania legislators. The results are easily seen in the important legislation passed into law in the past 10 years. 

Two pieces of legislation promoted by the utility companies set the stage for the current push by private, investor-owned utilities to buy municipal utilities in Pennsylvania.

In 2012 the PA legislation passed Act 11 which had two major impacts on rate setting by water and wastewater utilities.

#1 - It allows utilities to petition the Commission for approval to implement a Distribution System Improvement Charge (DSIC). This allows utilities to raise rates after implementing system improvements before their next formal rate adjustment request.

#2 - It exempts water and wastewater utilities from the prohibition on combining, for ratemaking purposes, different utility types and by allowing the Commission to allocate a portion of the wastewater utility's revenue requirement to the combined water and wastewater utility. 

Act 12 was signed into law in 2016. This piece of legislation did more than any other legislation to help line the pockets of Big Water. Before 2016, investor-owned water or wastewater utilities were restricted to purchasing “ailing” municipal utilities for their depreciated book value. Unsurprisingly, few sales were seen in Pennsylvania.

Act 12 now allows investor-owned utilities to purchase well run, stable municipal utilities for “fair market” value, leading to a rash of sales at inflated prices. The cost of these sales is, of course, passed to the ratepayer.

The politics of Act 12 are interesting and highlight the close relation between Big Water and the PA legislature.

There is some activity in the Pennsylvania General Assembly to repeal or modify Act 12.  On December 12, 2023 the PA House Committee on Consumer Protection, Technology & Utilities held a hearing on four bills to amend Act 12.  Here is a link to that hearing (LINK).

Then on January 22, 2024 the PA Senate Democrat Policy Committee held a hearing on Act 12.  Two co-founders of Keep Water Affordable testified at that hearing.  Follow the link in the red arrow below for more about that hearing. 

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