Frequently Asked Questions

The Board of Supervisors’ vote began the sale process, but it is not finalized yet. The sewer sale is going through regulatory approval. Home Rule Charter will give us the ability to prohibit the sewer sale before the deal officially closes.

According to sections 14.01-.02 of the Asset Purchase Agreement (APA) between Towamencin and PA American, there is a no-fault event of termination if the deal is made illegal before closing, leaving both parties “without liability or other obligation” to each other.

This could happen if Harrisburg passes a law making the sewer sale illegal before close. The Home Rule Charter makes the sewer sale illegal at a local level. Judges are instructed to favor Home Rule Charters in legal disputes (unless there is a law that specifically preempts a provision).

The Government Study Commission’s solicitor agrees that the Home Rule Charter can trigger the no-fault termination language of the APA.

Big water companies like American Water, Aqua America, and, in the case of Towamencin, the Florida-based NextEra have been buying up water and wastewater systems in Pennsylvania after legislation passed here that allows municipalities to sell public utilities more easily.

In 1997, Pennsylvania was the first state to pass a “distribution system improvement charge,” which allows water companies to raise certain rates without standard regulatory oversight. Then, in 2016, Pennsylvania passed Act 12, which authorized municipalities to sell their public utilities at “fair market value” (FMV), which bases the price not on expected cash flows but on what a knowledgeable buyer would be willing to pay. The act works alongside Act 11, passed a few years earlier, which allows water companies to recover the costs of acquisitions and investments by raising customers’ rates.

https://www.thenation.com/article/environment/pennsylvania-water-privatization/

A recent study comparing cost and affordability between public and private water utilities stated:

[NJ and PA] prices are some of the highest in the sample. American Water and Aqua America (now called Essential Utilities), which are the largest US-based investor-owned water utilities, have successfully advocated for regulatory and legislative changes that facilitate acquisitions and price increases, including ‘fair value’ legislation and DSIC to facilitate cost shifts to ratepayers.

https://iwaponline.com/wp/article/24/3/500/87702/Water-pricing-and-affordability-in-the-US-public

Aqua Pennsylvania has 40,000 wastewater customers in Southeastern PA. In 2022, rates increased an average of 59%. Some municipalities who recently sold their systems to Aqua will see even higher increases:

• Limerick Township, up 98%

• New Garden, up 90%

• Cheltenham, up 69%

• East Norriton, up 73%

Aqua Pa. details its steep rate increase and hits sewer users the hardest

Previously, New Garden Township was among the first to sell its sewer system after Act 12 passed. When the sale was announced in 2017, New Garden residents watched their wastewater rates jump 30 percent, and when it was completed in 2020, rates spiked another 37 percent. The agreement between Aqua and New Garden initially included a two-year rate freeze, but this “guarantee” was rescinded in 2019.

https://www.thenation.com/article/environment/pennsylvania-water-privatization/

The township has reported that our system is currently well maintained. We expect that sewer rates will need to increase to meet the demands of upgrades and inflation. However, retaining our ownership of the system will allow us to run the system without having to pay shareholder profits or pay for the purchase of a sewer system that we already own.

Using historical rate increases for our current sewer ownership, the rates would be around $650 per year in 8-10 years. They are currently $450 per year. PA American’s current average rates are $1,272.

We agree… that is a lot of money! However, that puts the ratepayers on the hook for repaying that amount of money plus corporate profits on top of that. Towamencin residents will have no say in what happens to our sewer system or how high sewer rates can go.

Additionally, we have no guarantee that the current or future Board of Supervisors will spend that money responsibly. We believe our local government should acquire & spend money with transparency, and not obtain a slush fund through the sale of our shared assets that amounts to a back-door tax.

The Township claimed that they would use the proceeds of the sale to avoid tax increases, which has a nice sound to it. Who likes paying taxes? Unfortunately, this still results in a bad deal for residents:

- Normal taxes are prorated to income and property value. Private sewer rates are not. They are regressive and impact lower & fixed income residents the hardest.

- Towamencin has control over future tax rates and can reduce them if needed. Private sewer rates will only continue to go up.

- Privatizing the sewer system to pay for township items related to things other than the sewer system is akin to taxation without representation. Local government should engage with residents regarding the needs and wishes of the community and work together to fund the priorities, rather than take & spend 'free money' at the expense of residents.

- The consultants also projected that total impact (between sewer rates + taxes) would be lower by selling the sewer system. However, once you account for the fact that sewer rates will likely be much higher than their projections, these savings whither away and residents end up paying more than if the system wasn't sold.

- There is no guarantee that the proceeds will be managed responsibly. There are currently no publicly released plans to add safeguards around the use of this money.

The state and local government have the right to force you to connect to public sewer in the future if they please. You would then be stuck with exorbitant rates like the rest of the township.