Released: September 9, 2022
This week, Aqua Pennsylvania sent a misleading political mailer to every household in Delaware County regarding County Council's opposition to the last-minute, no-bid sale of DELCORA, the County's wastewater treatment facility. Aqua Pennsylvania also posted a factually incorrect statement on a campaign-style website, as part of its effort to force the County to accept a purchase price well below what it offered to purchase Bucks County's sewer system — a bid that was unanimously voted down by the Bucks County Commissioners.
Here are the facts:
The sale of DELCORA was never approved by the County and Aqua Pennsylvania wants to prohibit the County from having a say in the sale. The approval of the DELCORA sale was made possible by a last-minute change enacted by three departing members of Delaware County Council to DELCORA’s charter in 2019. There was no public bidding process and only minimal public discussion. The proposed sale was never brought to Council or approved by Council. The new Council majority, elected in 2019, quickly took action to reverse the sale and the Administrative Law Judge of the Public Utilities Commission found that the DELCORA deal would provide no benefit to ratepayers. Aqua Pennsylvania has argued in its court filings that County Council should have no voice in the sale of the public asset.
Delco and DELCORA’s ratepayers are being shortchanged. Aqua Pennsylvania offered roughly 25% of what it offered to purchase Bucks County's system. Although DELCORA serves more customers than the Bucks County Water and Sewer Authority (BCWSA), Aqua Pennsylvania offered $1.1 billion to purchase BCWSA, but only $276 million for DELOCRA in its no-bid deal. Bucks County taxpayers were going to get a $700 million windfall under the proposed deal while putting only a small part of the proceeds towards rate stabilization. Aqua’s deal for DELCORA requires all of the sale proceeds to be used to offset its rate increases. BCWSA services 75,000 customers while DELCORA provides service to approximately 165,000. The sale of DELCORA would be Pennsylvania’s largest privatization ever of a public water or wastewater system.
Administrative law judges at the Public Utilities Commission (PUC) recommended rejecting the DELCORA sale. Last year, a panel of administrative law judges at PUC recommended the sale of DELCORA to Aqua be rejected, stating that it found no evidence that the sale would be in the public’s interest.
Aqua Pennsylvania intends to use sale proceeds due to taxpayers to offset its higher fees. In its misleading campaign-style website and mailer, Aqua wrote that it “is committed to using $200 million from the sale to keep customer bill increases at no more than 3% annually for 10 years.” In other words, the money that Aqua is paying for DELCORA’s assets is the money Aqua expects to be used to offset its rate increases that occur from purchasing assets, whether from DELCORA or another municipality. However, the $200 million in sale proceeds are funds that legally should go to the County and taxpayers. If Aqua gets its way, taxpayers will give up control over a public asset and subsidize a private company’s rates at the same time.
Aqua’s cost of capital is higher than a municipal entity’s. As a municipal government, the County’s borrowing costs are lower than Aqua’s, so the required investment in upgrades and expansion at DELCORA would cost less if the County oversees these.
The costs to separate from Philadelphia are the same for the County or Aqua. In its mailing, Aqua laments that some portions of Delaware County’s wastewater are treated in Philadelphia and DELCORA is required to end that process by 2028, incurring costs. However, the costs to separate from Philadelphia’s Water treatment are the same whether DELCORA remains a municipal asset or is purchased by Aqua.
No publicly traded company simply covers costs — they pass them onto ratepayers. As part of its public relations campaign, Aqua has stated that “Aqua – not taxpayers – will invest nearly $1 billion on DELCORA’s sewer system in purchase price and capital through 2028.” But as the company itself makes clear with its statement that it will use taxpayer funds to hold down ratepayer costs, any investment Aqua makes in DELCORA will be passed along to ratepayers and taxpayers.
Aqua's tactics are unethical and misleading to Delaware County residents. As a public company that has recently endured several legal defeats and public condemnation, Aqua is undoubtedly feeling the pressure to meet its commitments. But the pressure the company feels doesn't change the fact that the DELCOA deal is a bad one for Delco ratepayers and taxpayers.
The County is considering its next steps.