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 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. Governor Wolf placed Chester in receivership due to its financial problems. 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 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: The Commonwealth Court decision was then appealed to the PA Supreme Court, asking that Court to weigh in on the ownership of CWA. 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 The PA Supreme Court agreed to hear the appeal of the Commonwealth Court Decision. 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 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 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 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: 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

Are Local Officials Proposing To Sell Your Water Or Sewer System? And are they telling you: The water/sewer system is in dire need of repairs Essentially, it is falling apart Costly repairs are needed We cannot afford the repairs - or Repairs would require a huge rate increase Therefore, we have to sell Then Start Asking Questions If so, it is possible, maybe even likely, that they are telling you the only solution is to sell the system to Big Water . If you are hearing this line, read on and start preparing to grill your elected officials with a ton of detailed questions. And, do not accept evasive answers. New Garden Township Experience We experienced the above scenario beginning in 2014 when New Garden Township started evaluating a sewer system sale. Key justification for the sale was that major repairs were needed and that was going to require an almost 80% rate increase to fund $12 million worth of capital improvements. (the rate increase was also questionable even if the full $12 million was required. See this LINK ). What follows are highlights about what we were told and what we have been able to piece together about the status of the sewer system. 2015 Sewer System Status Reports Two reports in 2015 summarized the condition of New Garden's two waste treatment plants. A key feature is the statement: "No corrective action plan required" Things were not perfect, but it does not support the notion that the system was "falling apart". Here are links to the EAST and SOUTH end reports These are long reports. Sections 6 & 9 are the focus here. 2016 Upgrade "Requirements" The claim that $12 million were needed is difficult to reconcile with the system reports noted above. At the time, New Garden did not provide its citizens very much information about what was needed. The following is from FAQ’s posted by New Garden Township: Here are the actual FAQ's: 2016 - Continued Several months before New Garden issued its 2016 FAQ's, Aqua had provided the following data: It appears to us that a much more “apples to apples” comparison would have been New Garden’s $12 million five year plan versus Aqua’s $3.5 million over five years. Instead, New Garden characterized Aqua's data as "... approximately $7,000,000 in the next few years... ". $12 million, needed essentially “right now” was central to New Garden’s justification to either sell the system or raise rates almost 80%. An “apples to apples” comparison with Aqua most likely would have raised some red flags. Flags that we think should have been raised. Summary of New Garden's Capital Plan New Garden provided us with a 2014 capital plan for the sewer system. To summarize: There are 44 items totaling $10.5 million. One of those items was a $1.5 million “blue sky” capacity expansion without any specific timing. This was probably a “maybe” project for the indefinite future. Funding for an item like this should not be part of a capital plan. Nine items were “repairs” totaling $1.7 million. This stuff might be needed, but should be on a maintenance budget, not a capital budget. The remaining 34 items totaled $7.3 million. An approximate schedule was indicated: That does not appear to support an immediate need for $12 million, even if the “repair projects were included. You can download the full eight page report using the following button: 2017 - Things Have Changed About eight months after signing the sales contract, Aqua filed the following with the PUC: In that same Main Brief Aqua went on to state they were not projecting any other capital projects. Full details here: So, New Garden’s $12 million or Aqua’s $7 million in July of 2016 had been reduced to $2.5 million by March of 2017. A key requirement of Aqua's PUC filing is that they are attesting to the truthfulness of its contents. This certainly calls into question New Garden's claims about what was needed. 2019 - New Garden Public Meeting On September 23, 2019 New Garden held a public meeting to kill a contractually guaranteed rate cap - a story of its own that is told here (LINK ). At that meeting the issue of needed investments was questioned. Here is the question and answer: It appears that the $12 million over five years noted in 2016 shrunk a bit. Still five million within three years. However, there is still a wide gap between this and Aqua's estimate to the PUC in 2017. Incidentally, Aqua was present at that meeting and said nothing when this answer was given. Here is the full transcript of the 2019 meeting. 2020 New Garden FAQ Posting In early 2020 New Garden was required to mail all sewer customers a notification about the sewer sale. New Garden also posted a set of FAQ's on its website to explain why customers were receiving the notice. The 2020 FAQ's repeated all the same $12 million and $7 million investment numbers found in the 2016 FAQ's cited at the top of this page. In spite of the subsequent events just noted, no changes were made. Details here: 2023 - The Route 41 Force Main This came up repeatedly as a major issue. It was a $1.1 million immediate project in New Garden's 2014 capital plan. As noted above, it was a key element of New Garden’s $12 million plan in the July‑2016 FAQ. Also, as noted previously, Aqua included this item in its 2017 brief to the PUC. Aqua stated they would do some engineering evaluations of the situation. Was the force main really a critical need? Judge for yourself – 12 years later the line has not been replaced. Actual Capital Spending By Aqua Aqua’s capital investment in the New Garden sewer system is also indicative that the system was not falling apart. Aqua has reported its capital spending for the first two years it has owned the system. The investment has been: This is right in line with what Aqua stated in it’s Main Brief filed in 2017 (noted above). Observations include: #1 - The Spray Field Automation was to increase capacity at the South End plant and reduce labor costs. It is probably well justified. #2 - The Dry Line Activation was putting an unused pipeline back in service. Spending less than $700,000 saved over $1 million/year in wastewater trucking costs. Every two years Aqua is earning triple its investment. That kind of justification is “DUH” obvious. It is something New Garden should have done years ago to stop trucking wastewater. #3 - Also, note that most of the spending was in the first year. It appears that Aqua got busy immediately and fixed the deficiencies. This is another indication that New Garden's claim that $12 million would be required to repair the system was substantially overstated. Conclusion Before the sale we were told $12 million had to be invested if New Garden did not sell the system. We think the information presented above pretty well destroys that claim. What do you think? If your water or sewer system is up for sale, are you hearing the story that it is falling apart? Is the next line we cannot afford the upgrades needed? Then it is time to Question Question Question Your Local Officials.

Website Structure Here are links to all the topics covered on this website Recent Site Additions: (LINK ) The Ba sics 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 Playb ook 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 expir es ( 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 - Th e 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 2 016 (LINK ). This is Pennsylvania's version of Fair Market Value. We have also put together a bit of histo ry 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, h ere 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 Bond Option - A ratepayer friendly alternative to a system sale Big Water Biz Profile - A profile of American and Aqua and their businesses in PA BW Growth Strategy - How the corporate parents of Big Water plan to grow their businesses Conflict - A story of legal conflict on interest in New Garden's sewer sale Contact - How to contact Keep Water Affordable - KWA CPLT #1 - PUC complaint details on New Garden use volume in Aqua's 2021 rate case CPLT #2 - PUC complaint details over New Garden sewage trucking in Aqua's 2021 rate case CPLT-Appeal - The appeal of the PUC's complaint denial to the Pennsylvania Commonwealth Court CPLT-AqData#1 - Technical details from Aqua's 2021 rate filing (see CPLT #1, above) CPLT-AqData#2 - Technical stuff on how Aqua's data from CPLT-AqData#1 was consolidated CPLT-AqReply#1 - Summary of Aqua's reply filings to my two complaints CPLT-Exceptions - Summary of actions we took when the PUC's Initial Decision dismissed the complaints CPLT-Hearing Details - What happened at the 11/25/2024 complaint hearing CPLT-Hearing ID - The Initial Decision after the 11/25/2024 hearing denying my complaints CPLT-OpManager - The key piece of evidence in the trucking complaint CPLT-Order - The PUC's final Opinion and Order denying my two complaints CPLT-Validation - Technical stuff validating my consolidation of Aqua New Garden use data CWA Status - Background, timeline and status of the attempt to privatize CWA Directory - This page Econ - The basis for why privatization is a bad deal for ratepayers Falling Apart - A common justification for selling a municipal system - often false Fiasco - The story of a 11/21/2022 official New Garden meeting to explain then recent rate increases For vs non profit - Why an acquisition always results in huge rate increases - it is baked in Governorlttr - An out of date letter to Governor Shapiro about CWA Higher Cost - Why Big Water's claims of lower cost are deceptive Home - Literally the home page for this website Interest - A request for help on who should pay Big Water's interest costs Legislation - Background on PA's Act 11 and Act 12 Links - Literally, links to other websites with related content Municipal Utility - Why local governments should provide water and sewer service NG Rate Cap - The offering and taking away of a ten year rate cap for New Garden's sewer sale NGT Case Study - The story of New Garden selling its sewer system to Aqua Oppose Privatization - Why and how to oppose sale of your municipal water or sewer system PA - A short summary of what is happening in Pennsylvania Pending PA Legislation - Self explanatory Playbook - Big Water's methodology for enticing local governments to sell PUC Complaint - The main page for the two PUC complaints against Aqua PUC Rate Process - Uses Aqua's 2024 rate filing to go through the steps for a typical rate case Rate Increase Needed - A big rate increase needed is usually justification for selling the system Rate Mitigation - How New Garden claimed it would offset big rate increases - but did not Road Map - Typical steps leading to a municipality selling a water or sewer system Sale Review - New Gardens big switcheroo in its promise to review its sewer sale Sample letters - Suggested letters to government officials about repealing Act 12 Search Results - self explanatory Senate Committee - The results of a committee meeting on repealing Act 12 Sewage Trucking - The story behind New Garden trucking sewage from one facility to another Subscribe - Sign up for our mailing list The Basics - Water and sewer service alternatives & why local non-profit benefits ratepayers The Suitcase Of Money - How money drives sale of municipal systems to Big Water Updates - What is new on this website

Contact us at keep water affordable @gmail.com

The Utility Rate Setting Process Introduction When a regulated utility wants to raise rates, the Pennsylvania Public Utility Commission (PUC) has a well defined process that must be followed. Here is a link to the PUC's summary of their process: (LINK ) What follows uses an example of a rate case filed by Aqua Pennsylvania to raise rates for both its water and sewer customers. Although this is specific to Pennsylvania, most states follow a similar protocol for publicly regulated utilities. In Pennsylvania some of the case related documents are publicly available via a website "docket". Here is the docket for the example case that follows: (LINK ). The Start - Aqua Files For A Rate Increase The process begins when a regulated utility files for a rate increase. Since it is an involved and expensive process, it is not an everyday event. For the Big Water Companies in Pennsylvania, it typically happens every two to three years. For this example, Aqua filed a notice with the PUC on May 23, 2024. At the same time they also filed 17 volumes of required information supporting their request. Those 17 volumes totaled over 4,500 pages. Clearly, a lot of preparation went into this filing. Volume one of those filings proposed increased water and sewer rates that would go into effect on July 22, 2024 - just two months after filing. That date is a bit amusing because everyone knew full well that rates would not go up on that date. The next section explains why. Customers are also notified. On May 25, 2024 I received the following "Dear Customer" letter: Other Parties Promptly Get Involved In Pennsylvania, two organizations have been created to advocate for public utility customers. The Office of Small Business Advocate (OSBA) The Office of Consumer Advocate (OCA) Both automatically get involved in rate cases. They each filed formal complaints about the rate case - the OSBA on May 29, 2024, and the OCA on June 3, 2024. They claimed there were issues that needed investigation and that the proposed rate increase should be suspended until those issues were resolved. These complaints are essentially routine procedure. The PUC responded on June 13, 2024 with an order suspending the increase and launching an investigation. This action was also standard procedure. PA state law requires the investigation be complete within nine months. Therefore, the PUC's suspension pushed back the effective date of the rate increase to February 22, 2025. The PUC itself has a division called the Bureau of Investigation & Enforcement (I&E). This organization is also a major player in rate cases. Very often OSBA, OCA and I&E are aligned on their positions in a rate case. There also are usually other players. They generally focus on specific issues rather than the rate case in total. For example, CAUSE-PA is an organization advocating for low income individuals. Another example is the Aqua Large Users Group. Many individuals file formal complaints but are generally not active participants in the rate case. Often these complaints are of the "oh woe as me" type bemoaning higher costs for water or sewer. They do not carry any weight in the rate setting process. Early Activities Interrogatories OCA, OSBA and I&E will review the utility filings and submit questions about them. These are called "interrogatories". They are not publicly available. In fact, copies were only sent to the OCA, OSBA, I&E and Aqua. These interrogatories were submitted between May 31, 2024 and June 12, 2024. Prehearing Conference An Administrative Law Judge (ALJ) is assigned to administer the rate case. For this case two were assigned. One of their early activities is to get the various parties together for what is termed a "Prehearing Conference" The following notice was sent to 22 parties and the meeting is apparently open to the public: Scheduling Order This is a document that essentially set the timeline for the case. It was a 19 page document sent to a long list of people. It can be viewed here: (LINK ). A key summary table from the order is: Core Activities Public Hearings For Aqua's case nine public hearings were held at five locations scattered around the state. Plus, there were two more held via telephone. Logistically, this is a major undertaking. All the major parties to the case are present at each hearing. A court reporter records all the testimony. Essentially anyone can come and express their thoughts about the rate case. Much of the testimony is people expressing concern about being able to afford the rate increase. Occasionally there are specific complaints about service. Rarely, someone praises the utility company. One of the public hearings was in our backyard of New Garden Township. All three Co-Founders of Keep Water Affordable testified. Our testimony can be found here: Peter Mrozinski Margo Woodacre Bill Ferguson Testimony & Evidentiary Hearings We really do not know very much about this phase of the process. There are indications that various subject matter experts are called upon to testify. The Evidentiary Hearings are apparently open to the public. At least they are announced in advance to the public (LINK ). Main Briefs This is a major milestone in the process. Each party to the case takes all the information presented and states their case. The utility usually claims justification for everything they asked for. The other parties challenge specific items in the rate case. These documents are generally tedious to read. However, they provide a good overview of the issues. Examples for Aqua's rate case include: Aqua (LINK ) - 82 pages OCA (LINK ) - 59 pages I&E (LINK ) - 18 pages OSBA - none found Reply Briefs This is the opportunity for each party to point out issues with the Main Briefs of others. It is sort of a legal jockeying back and forth. This mostly ends each party presenting their position to the PUC. The main examples for Aqua's rate case are: Aqua (LINK ) - 56 pages OCA (LINK ) - 36 pages I&E (LINK ) - 14 pages Settlement & Recommended Decision Settlement agreement In this rate case the major parties came to a settlement agreement on most, but not all, of the issues. This is something the PUC encourages but does not require. A settlement can occur at any point in the process. In this case it was announced at the same time the Reply Briefs were filed. The Settlement Agreement can be found here (LINK ). It is a hefty 529 pages. The actual agreement is covered by pdf pages 11 - 37. The rest of the document is attachments detailing rates, revenues and customer impacts. Recommended Decision This is the normal next step after the Reply Briefs. The Administrative Law Judge evaluates all the information that has been presented and makes a recommendation to the PUC Commissioners on each issue. This is all summarized in a formal document called a Recommended Decision. It carries a lot of weight but is not binding on the Commissioners. The Recommended Decision for Aqua's can be found here: (LINK ). At 192 pages it is fairly long. It goes through the case issue by issue. It summarizes the issue, states the position of each party and recommends a disposition of that issue. Exceptions & Reply Exceptions Exceptions Exceptions are the opportunity for the major parties in the case to protest that the ALJ got something wrong in the Recommended Decision. It is the major parties speaking directly to the PUC Commissioners. Examples include: Aqua (LINK ) - 454 pages. However, most of that is refiling attachments to correct previous errors. Only pdf pages 11 - 30 are Exceptions. The OCA and I&E did not file exceptions. Reply Exceptions This is the opportunity for the major parties to comment on any Exceptions filed by the other parties. Again, it is each party speaking directly to the PUC Commissioners, generally disagreeing with something in the Exception filing. Reply Exceptions for Aqua's rate case included: Aqua (LINK ) - 39 pages OCA (LINK ) - 20 pages I&E (LINK ) - 13 pages PUC Opinion & Order This is essentially the end of the process. The Commissioners take the Recommended Decision, Exceptions and Reply Exceptions and make a final decision. It is voted upon at one of the regularly scheduled public meetings of the Commissioners. Then a formal Opinion and Order is posted. Here is the Opinion and Order for Aqua's rate case: (LINK ). It is 185 pages. In this case the Commissioners accepted the Recommended Decision with only trivial changes. The decision can be appealed through the Pennsylvania court system. But, that is not common.

Aqua’s Consumption Volume Data This section reproduces the six pages of Aqua’s compliance data for New Garden customers. They are PDF pages 157 – 162 from this filing by Aqua: LINK I challenge anyone to identify the issues in my consumption volume complaint from the following pages. This is PDF page 157 from this filing by Aqua: LINK The key numbers are highlighted in yellow. This is PDF page 158 from this filing by Aqua: LINK The key numbers are highlighted in yellow. This is PDF page 159 from this filing by Aqua: LINK The key numbers are highlighted in yellow. This is PDF page 160 from this filing by Aqua: LINK The key numbers are highlighted in yellow. This is PDF page 161 from this filing by Aqua: LINK The key numbers are highlighted in yellow. This is PDF page 162 from this filing by Aqua: LINK The key numbers are highlighted in yellow.

How Aqua’s Volume Data Was Consolidated The following pages show how Aqua’s six pages of consumption data (LINK ) is consolidated into the following table: Table #1 - Aqua’s Consumption Volumes Aqua’s compliance data is divided into two parts: Three pages of “Consumption Analysis” and three more pages of “Billing Adjustments”. The following table is a one to one matching of Aqua’s consumption data. The numbers highlighted in yellow bear a one to one relationship with Aqua’s consumption data (LINK ). Likewise, the following table is a one to one matching of Aqua’s “Billing Adjustments”, Again, the numbers highlighted in yellow bear a one to one relationship with Aqua’s data (LINK ) The next step is to consolidate Aqua’s consumption data and billing adjustments by simply adding the number from the two above tables. The result is: Finally, dropping all the zero lines at the bottom of the page results in Table #1 shown at the top of this webpage. Those nine volumes and three billing numbers are the basis for Aqua’s tariff setting and compliance calculations. Validation that this actually represents Aqua’s data is shown here: LINK

What’s Happening In PA Most residents in the United States obtain their water and wastewater service locally, either with private well and septic systems, or from locally owned and controlled utilities. This is changing, as large investor-owned Big Water companies have recognized they can extract profits by buying up and consolidating small locally owned systems. WE DELIVER $65,000,000 leaves the PA economy annually to fund Big Water Profits. Growth through acquisition is a key component of Big Water's strategy . For these companies, earnings are directly related to investment. Investment in the purchase of a public utility leads to immediate profits. More on the profitability of these Big Water companies. Pennsylvania has become a hot bed for water and wastewater privatization. Two of the largest private for-profit utility companies targeting PA are headquartered near Philadelphia (LINK ). The PA legislature is heavily lobbied by Big Water companies, resulting in the passage of privatization friendly legislation, legislation which favors the growth and profitability of these companies at the expense of the ratepayers (LINK ). For example: #1 - These companies are allowed to extract substantially more profits in PA than in other states they serve. #2 - Currently $65 million/year leaves the PA economy to fund Big Water company profits. The PA Public Utilities Commission consistently favors privatization expansion and rate increases. The PUC will sponsor the required public hearings before an Administrative Law Judge before ruling on a sale or rate increase, but it has routinely overruled the ALJ's recommendation and allowed the utility request. The major driver of the current frenzy of privatization in PA is legislation passed and signed into law by the governor in 2016, Act 12 , the so called “Fair Market” Act. Act 12 should be called the “Predatory Pricing” Act for it allows local municipalities to negotiate an inflated price for its utility, leaving the bill for the rate payer. To understand Act 12 and its impact click here . With the deck stacked against them due to the complicity of the state legislature and the PUC, the ratepayer has little recourse. Although some legislators recognize that privatization does not benefit the ratepayer or the state economy and have introduced legislation beneficial to rate payers, this legislation always dies in committee. The best recourse for rate payers is to recognize when a takeover is threatened, understand the consequences, and pressure local politicians. To do this you will need to understand the Big Water takeover playbook . Then you will need to organize and take action. For help follow this link. What can you do?

Big Water Growth Strategy Nationwide the two largest water/wastewater utilities are Essential Utilities – the parent company for Aqua Pennsylvania American Water – the parent company for Pennsylvania American Water Both companies are seeking aggressive earnings growth through acquisition and infrastructure renewal. This is not surprising because as regulated companies their annual earnings are a direct percentage of their investment. The more they invest, the greater their profits. Therefore, their strategy is to grow their investment base. One element of investment growth is infrastructure renewal. Pennsylvania is a prime example for both companies for their water business (LINK ). The second major element is acquiring nonprofit municipal water and sewer systems. In Pennsylvania most of the acquisition activity has been for sewer systems (LINK ). Both companies are very open about their acquisition strategy. A good source of information is their periodic investor presentations - typically four or five every year. A couple of examples follow. These examples are for specific presentations, but there is substantial consistency from one presentation to the next. Open whatever is the most current one and you will see extensive discussion about the growth drivers for their business and how they are maximizing investor benefit. American Water As the time this was written, American's latest investor presentation was dated June-2026. It can be downloaded here (LINK ). If that link does not work you can Google "American investor presenations" and the latest one will pop up. Highlights of the presentation include: #1 - There are a total of 36 pages. Of those, 24 directly relate to their business growth strategies. #2 - There are a couple of pages on earnings per share. Notably that they forecast 7% - 9% growth every year. #3 - There are multiple pages on their capital spending plans - a key earnings driver. #4 - There are pages on favorable state legislation. #5 - Aging infrastructure is addressed as an opportunity. #6 - There are pages on acquisition activity - both completed and in progress. #7 - Several pages address rate increases obtained recently. Essential Utilities (Aqua in most states) Essential's most recent investor presentation was May 9, 2026 - at least at the time this was written. It can be found here (LINK ). Highlights include: #1 - There are a total of 22 pages. However, eight of those pages are "place holders" - things like pictures of key officials and a forward looking disclaimer. So, 14 pages of real information. Of those 14, seven are related to earnings growth, acquisitions, investment plans and regulatory activity. #2 - One page touts that since 2015 Essential has spent $570 million acquiring 138,000 customers. It also notes three other pending acquisitions. #3 - Two pages detail regulatory actions leading to higher revenues. Nationwide the two Big Water companies, have captured almost 190,000 customers in the last few years. What benefits have these customers realized? Is the water coming out of their faucets more pure? Do their toilets flush any better? In the large majority of cases the answer is a resounding NO!. The most dominate impact on customers is significantly higher bills. Big Water acquired those customers to increase their profits (LINK ). So now those customers have to pay up. The following table illustrates the point for acquisitions made in Pennsylvania. We used tariff rate data from before the acquisition and rate case records to calculate the rate increases customers are actually seeing. They are based on a customer using 4,000 gallons/month. The water companies typically claim their "average" customer ranges between 3,000 - 4,000 gallons/month. This is called “rate shock”. How much say did these customers have in the acquisition process? It is pretty likely that the answer for most of them is “not much”. Here is a description of how many acquisitions take place: (LINK). however, there is hope, push back on these acquisitions is forming.

Introduction On May 23, 2024 Aqua Pennsylvania filed for a state wide rate increase. They proposed to increase their revenues by $127 million/yr or 19%. This started an extensive legal process run by the Public Utility Commission (PUC) that culminated with a rate increase on February 22, 2025. A summary of the rate setting process can be found here: (LINK ). That summary used Aqua's 2024 rate case as an example. As a result it contains a lot of information about the 2024 rate case. What follows is information about the major issues for the rate case. Major Issue #1 - Size of Aqua's Proposed Increase Essentially Aqua wanted to increase water rates by 15% and sewer rates by 50%. However, via Act 11, they proposed to move 60% of the sewer increase to their water customers. 60%! That would be burdening their water customers with a large part of the cost of their Act 12 acquisitions. A frequent result of these rate cases is that both the amount of the increase and the amount of the Act 11 shift is reduced. As summarized below, that was, indeed, the result. Major Issue #2 - Rate Increase For East Whiteland The PUC approved Aqua's $54 million acquisition of East Whiteland's sewer system on 7/29/2022. Shortly thereafter Aqua executed the deal. Importantly, Aqua closed the deal before the 30 day window to appeal the decision had closed. Unfortunately for Aqua, the Office of Consumer Advocate (OCA) filed an appeal with the Commonwealth Court. The basis of the appeal was that the sale did not provide "Substantial Public Benefit ". On 7/31/2023 the Commonwealth Court issued an opinion REVERSING the PUC's approval of the deal. Oops, Aqua had spent $54 million on the acquisition, but suddenly did not have the necessary approval to own it. Aqua promptly asked the PA Supreme Court to accept an appeal of the Commonwealth Court decision. The Supreme Court agreed to hear the case but did issue a ruling before the rate case was complete. When Aqua filed its rate case, they proposed to almost triple the revenue being collected for East Whiteland. Aqua argued that they were entitled to a return on their considerable investment. The OCA and the PUC's Bureau of Investigation & Enforcement (I&E) strongly objected to this. Their position was that without the approval the PUC does not have jurisdiction. If the Supreme Court upheld the Commonwealth Court, then Aqua would have to divest of East Whiteland's sewer facility. It would be unfair to East Whiteland's customers to increase rates unless the Commonwealth Court verdict is thrown out. Aqua took a business risk to close the deal before the appeal window closed. Not raising rates is just a result of that risk. The Settlement Agreement (noted below) set East Whiteland aside as a special case. Since the major parties strongly disagreed, they excluded East Whiteland from the settlement. They left it up to the PUC to make the decision. However, they did agree to an either/or outcome. The two options they presented to the PUC was either a $6.4 million/year increase or no rate increase. That $6.4 million would have been 181% rate increase - nearly a tripling of rates. In either case there would be no Act 11 adjustment. The Administrative Law Judges running the rate case agreed with the OCA and I&E in their Recommended Decision - no increase for East Whiteland. In the subsequent filings Aqua strongly objected to this result. And, of course, both the OCA and I&E refuted Aqua's arguments. Ultimately, the PUC Commissioners denied Aqua an increase for East Whiteland. Well after the rate case was complete, the Pennsylvania Supreme Court reversed the Commonwealth Court, allowing Aqua to keep East Whiteland's sewer system. A rate increase for that system will now be part of Aqua's next rate case. Based on the $6.4 million/yr noted above, there will likely be some major rate shock whenever Aqua's next rate case goes into effect. Major Issue #3 - Settlement By The Major Parties For this rate case, the major parties came to agreement (LINK ) on most of the significant issues. This is something the PUC encourages. This is what is termed a "Black Box" agreement. That means that most of the details of the outcome are kept secret. The amount of the rate increase is announced, but how they got to that result is concealed from public view. Here is a summary of the settlement increases: These numbers indicate that the total increase was reduced by 42%. The Act 11 shift was cut by a little more than half. However, the text of the settlement does not provide any basis to determine percentage increases. Based on Aqua's numbers noted above, the water increase is about 10% and the sewer increase is about 20%. There is substantial room for concern about the magnitude of the increases in the above table: #1 - There is a table on pdf page 68 of the settlement agreement that shows the water increase at $68 million/year. However, that number excludes $1.4 million/year of increases for acquisitions. Revenue from those acquisitions is currently being collected and will increase with this rate case. There is no reason to exclude them. When everything gets counted, the total water increase is $69.4 million/year. That is $11 million/yr or 19% more than claimed by the headline number in the settlement. #2 - For the sewer business, there is a table on pdf page 102 showing a $12.2 million/year rate increase. That is about $2 million/year less than what is shown in the above table. But this table also excludes two acquisitions - East Whiteland and Lower Makefield. It is reasonable to exclude East Whiteland from that table. As noted in the previous section, the major parties are disputing whether or not the PUC can legally let Aqua raise East Whiteland rates. For Lower Makefield there is no reason to exclude it. The Settlement increase for Lower Makefield is $3.8 million/year. So that would bring the total sewer increase to $16 million/year - almost 10% greater than the headline number in the Settlement text. #3 - The ALJ's noted this issue on pdf page 125 of their Recommended Decision. They were very low key about it. They noted that the headline number was indeed the settlement result. They noted that once the PUC reaches a final decision, then the company has 20 days to file new rates that are in compliance with that decision. #4 - Pages 68 - 135 of the Settlement Agreement provides detailed data on rates before and after the proposed increase. That data is tabulated in the following spreadsheet: The following table summarizes the data: The rate zone data clearly shows increases larger that the headline numbers. This is an unusual situation. Normally the numbers can be reconciled to the dollar. See the section below on the Recommended Decision and Opinion & Order for more on this issue. Major Issue #4 - The DSIC Impact On Rates When Aqua reports the amount of the increase, it is based on current bills versus the new tariff rates. However, the current bills include something called a "DSIC Charge". DSIC = Distribution System Improvement Charge. This is a wrinkle utility companies have gotten added to the regulatory system. It allows them to recover the cost of certain investments made between rate cases. When a new rate case is initiated, the current DSIC charges are incorporated into the new rates. Therefore, when the new rates go into effect, the DSIC drops to zero. But it will gradually increase until the next rate case. However, there is never a forecast of how much that DSIC will add to our bills by the time of the next rate increase. Conclusion: YES, the rate increase will be greater than advertised - by whatever amount of DSIC is added by the time of the next rate increase. A more objective way to measure the rate increase is to exclude the DSIC charge. For this case the DSIC charge is currently $38.1 million/year. If that amount is excluded the total increase jumps from 12.7% to 19.5% - that is significant. Excluding the DSIC charge is a good representation of the total increase from one rate case to the next. The spreadsheet in the link above includes the increase both with and without the DSIC cost. Outcome #1 - The Recommended Decision The Recommended Decision of the ALJ's was fairly simple for the major issues: 1 - They recommended against Aqua being allowed to raise rates for East Whiteland. 2 - They recommended that the rates in the Settlement be accepted. 3 - They did note the revenue discrepancy noted above. Outcome #2 - The PUC's Final Opinion & Order The PUC Commissioners essentially accepted the Recommended Decision with only trivial changes. They did confirm the two major issues: 1 - The headline numbers for the rate increase - $58.4 million/yr for water and $14.6 million/yr for sewer. 2 - Aqua was denied permission to raise rates for East Whiteland. How Much Will My Bill Increase Aqua has now filed its revised tariff schedule so the rate increases can be determined. Here are the system wide averages and links to zone by zone increases: Water - 18.4% excluding the DSIC charge. 11.0% including DSIC. Here are the individual water zone increases: Sewer - 22.6% excluding the DSIC charge. 21.3% including DSIC. However, much of the increase will be paid by the Act 12 acquisitions. Aqua customers prior to the Act 12 acquisitions will see much more modest increases. Here are the individual sewer zone increases: Rate increase data specifically for the five Act 12 sewer acquisitions can be found here: Rate Case Docket As noted above, rate cases involve extensive legal proceedings. Some of the documents filed in the case are available to the public. Links to those documents are posted in what is termed the "Case Docket". For Aqua's 2024 filing the docket number is R-2024-3047822. Here is a direct link to it (LINK ). As of 1/27/2025 there are 400 entries on this docket. Many of these are not useful to the general public. Here is a link to a file summarizing the more important filings:

PA Democratic Senate Policy Committee Holds Public Meeting State Senator Katie Muth (D-Chester/Montgomery/Berks), chair of the Pennsylvania Senate Democratic Policy Committee, joined Senator Carolyn Comitta (D-Chester), Senator John Kane (D-Chester/Delaware), Senator Tim Kearney (D-Delaware), and Senator Judy Schwank (D-Berks) on January 22, 2024 in Chester County to co-host a public hearing focused on water privatization and the unintended consequences of Act 12 of 2016. The meeting included testimony from two panels: Panel 1: Affected Residents ● Bill Ferguson – Co-Founder, Keep Water Affordable ● Peter Mrozinski – Co-Founder, Keep Water Affordable ● David McMahon – Neighbors Opposing Privatization Efforts (NOPE) ● Kofe Osei – Towamencin Township Supervisor, Neighbors Opposing Privatization Efforts (NOPE) Panel 2: Policy Solutions ● Anthony Bellitto – Executive Director, North Penn Water Authority | Pennsylvania Municipal Authorities Association ● Noel Brandon - Board Chair, Chester Water Authority ● Amy Sturges – Pennsylvania Municipal League ● Chairman Stephen DeFrank – Pennsylvania Public Utility Commission ● Patrick Cicero – Office of Consumer Advocate The committee stated its unanimous support for repeal of Act 12. A meeting summary, a full video of the meeting, as well as copies of written testimony can be found at: https://www.senatormuth.com/policy-hearing-focuses-on-addressing-rising-water-wastewater-rates/ Our KWA testimony starts at about 15:00 of the meeting video.

The Appeal To Pennsylvania’s Commonwealth Court When the “Opinion and Order” came down totally denying my complaints, both my pro bono attorney and I were very much deflated. We felt that the PUC really missed key legal issues. My attorney said that the only alternative at that point was to file an appeal with the Pennsylvania Commonwealth Court. Based on the legal issues he thought that the odds of success there were fairly good. However, that task was bigger than he wanted to undertake. So, we commiserated a bit and agreed that we had to let it go. About three weeks later I get an email from the attorney saying we need to talk. I wasted no time dialing his number. The issues with the PUC’s rejection of my complaints had been eating at him. This was an important issue that needed to be addressed. He was willing to take the case to the Commonwealth Court if I was. We agreed to proceed. On July 17, 2025 my attorney filed the appeal. We are case 876 CD 2025. Here is a copy of that appeal: Key points of the filing include: We are only appealing the decision on the trucking complaint. We believe this is a clear cut case of responsibilities not being met. And, it is easy to understand. The consumption volume complaint gets mired in lots of detail and math, making it hard to understand. The Commission erred by imposing the wrong standard for burden of proof. I DID meet the burden of proof even under the standard used by the Commission. The Commission failed to recognize a judicially recognized exception to the rules against retroactive ratemaking and single-issue ratemaking. The integrity of ratemaking is an issue because the Commission heavily relies on the truthfulness and completeness of utility filings. In fact: “rate case filings are made subject to the penalties for perjury and unsworn falsification to authorities under Pennsylvania’s Crimes Code”. The Commission’s decision is not supported by substantial evidence and wrongly relied on Aqua’s testimony. The decision by the Commission sends a message to would-be pro se complainants – they needn’t bother. If you go to the Court’s website ( LINK ) you can view a summary of case activity: There will be a "search by" drop down box - select "docket number". Enter case 876 CD 2025 and click "search". Finally, click on the “D” on the right side and a summary of the case will be displayed. Since submitting the appeal filing there have been the following actions: Aqua has signed on to participate in the case. On 8/29/2025 the PUC certified the list of documents for the case. That established the date from which the Commonwealth Court set a schedule for the case. Here is a copy of the list: On 8/29/2025, the Commonwealth Court issued a briefing schedule. The briefs for the case are due 10/8/2025. On 9/18/2025 my lawyer filed a request to extend the filing deadline by 30 days. The other lawyers involved indicated their non-objection. On 9/22/2025 the Commonwealth Court granted the 30 day extension request. On 11/10/2025 my brief and Reproduced Record were filed with the Commonwealth Court. The brief is 70 pages long with a number of in-depth legal discussions. Here are key highlights for quick reading: #1 - PDF pages 3 - 4 summarize the arguments supporting each of the legal questions. This is actually part of the table of contents, but is still an excellent summary. #2 - The introduction on PDF pages 9 - 11 explains why this case is important and gives some background on utility regulation. #3 - PDF page 14 tabulates the legal questions involved. #4 - PDF pages 33 - 38 are an excellent overall summary of the case. The Reproduced Record is too big to post here (350 megabytes), but here is our brief: The PUC and Aqua filing were due to file their briefs on 12/10/2025, but they each asked for a 45 day extension. On 12/1/2025 the Court granted that extension. On 1/29/2026 both the PUC and Aqua file their briefs: The final step before the Court acts was for us to file a reply brief. This turned into a bit of an involved process. Normally there is a 7,000 word limit for reply briefs. Due to the complexity and importance of the case my lawyer filed a request for 3,000 additional words. He expected that to be granted without opposition. However, both the PUC and Aqua objected and it took until 4/14/2026 for the court to issue an order denying the additional words. On 4/27/2026 we submit our reply brief: I recommend PDF pages 7 -13 as an excellent summary of the issues in this case. On 5/21/2026 the Court issues a brief order indicating that the case will be decided based on the briefs without oral arguments. It is possible that the Court could change its mind about oral arguments, but that is not likely. It is also possible that the PUC or Aqua could request oral arguments, but we will just have to wait and see on that. Otherwise, the next action is up to the Court.