Jan 4, 2019 3 min read

CHARLEROI – Representatives from the Pennsylvania-American Water Co. came to borough council’s workshop meeting Wednesday to talk about the options available for municipalities that decide to sell their water and wastewater systems to private sector-owned companies.

Dan Bickerton, director of business development for Pennsylvania-American Water, told council that state Act 12 of 2016 helps municipalities reduce their debt, make infrastructure improvements and stimulate the economy through a fair market value approach to selling their assets.

The presentation was arranged after Councilman Larry Celaschi told council last month that Charleroi could potentially generate extra revenue by selling its municipal authority to an outside entity like McKeesport did last year, netting $159 million from the sale to Pennsylvania-American Water.

“Act 12 was game-changing legislation,” said Bickerton. “McKeesport couldn’t have completed this type of transaction without Act 12.”

Bickerton said at the time of closing, an authority retains its cash and accounts receivable, as well as pays off its debt.

“There isn’t a cookie-cutter approach when going through this process,” said Bickerton. “Every situation is different. McKeesport had to go through a lengthy (request for proposals) process. The earliest something like this could happen for Charleroi is one (year) to two years from now. There are a lot of regulatory hoops to jump through.”

Any company that acquires a municipal authority is locked in to the current rate structure until the next general rate filing, when the state Public Utility Commission sets rate adjustments, Bickerton said.

Councilwoman Jodi Cheplic asked Bickerton if Pennsylvania-American Water would retain employees from the authority and offer them similar salary and benefits.

“In the case of McKeesport, we retained most of their employees at their same pay rate,” said Bickerton. “They also were eligible for our company’s benefits plan. It’s in our best interest to keep these employees since they know their water and wastewater systems better than we do.”

Bickerton added employees from an authority can also apply for other positions at Pennsylvania-American.

Celaschi said borough officials don’t have to make any commitments at this point.

“This is all exploratory and we may invite other players to talk with us,” he said. “We want to learn more about the pros and cons before we go any further.”

Added Bickerton, “This is a nonbinding arrangement. You aren’t obligated to follow through until you have a signed agreement.”

A group of employees from Charleroi’s municipal authority, including Chad Warfield, director of operations, attended the meeting. Warfield said he wanted to set the record straight about any rumors and misinformation concerning rates and current projects.

“It’s important to note that we don’t have any regulatory issues with our water,” said Warfield. “Our water meets and exceeds all federal requirements. I know you have a responsibility to the borough to make a decision, but I also have a responsibility for our 40 employees and 27,000 customers to look out for their best interests.”

Council President Jerry Jericho promised municipal board members that any discussions that take place with any outside entities will be kept transparent.

“I will listen to these gentlemen but anytime we call a meeting, you will be invited,” he said. “It won’t be behind closed doors. This sounds like an interesting concept and we are interested in hearing more from Pennsylvania-American Water. However, we can’t make any promises. We are also looking at other ways to help our community financially.”