Center and Summit townships won’t contest BASA sale
Center and Summit townships were prepared in late July to contest the sale of the Butler Area Sewer Authority to Pennsylvania American Water, but terms for a settlement among the involved groups were laid out just before the hearing.
Both townships ultimately agreed that they would not contest the sale of the authority’s assets, in part because the terms had benefits for them, but also because of the expected cost of further litigation.
“They had taken it as far as they could as supervisors, and it would not be effective to carry it any further, so they did not object to the terms,” said Michael Gallagher, solicitor for Center and Summit townships. “Now it's a one-year rate freeze and rates are limited to 1.4 times (the current rate). They are not 100% satisfied, but they understand there is a point where it wouldn't be cost-effective to bear the case by themselves.”
The joint settlement petition involves BASA; the city of Butler; Butler, Center and Summit townships; the water company; the state offices of Consumer Advocate, Small Business Advocate and the Bureau of Investigation and Enforcement of the Pennsylvania Public Utility Commission, and was revealed Monday, Aug. 14.
Paul Sybert, president of the Butler Area Sewer Authority board, said Cleveland-Cliffs also was involved in the settlement. The agreement was unanimously approved by all parties involved in the sale, which altered some of the initial terms of the sale.
The water company and BASA amended the purchase agreement to adjust the purchase price to $230 million from the initial $231.5 million. As part of the settlement agreement, the water company can recoup only $228 million through customer rates.
Additionally, the water company agreed to increase wastewater rates by up to 1.4 times the current rate in the year after closing the sale or on Jan. 1, 2025. Local officials said they were please it was reduced from previous anticipated rate increases.
“From the BASA board, we really care about the employees and we care about the customers, and to us, that's a very positive thing,” Sybert said of the limit of the rate increase limit. “Really, Pennsylvania American took the brunt of this.”
Sybert also emphasized the fact that any future rate increases proposed by Pennsylvania American Water following the sale would have to be reviewed and approved by the PUC before taking effect.
The annual base sewer service rate is $546 per equivalent dwelling unit. At the anticipated 1.4 times increase, the annual base rate would be $764.
As part of the agreement, Pennsylvania American Water will contribute $3.5 million, or $700,000 annually over five years, to the company’s statewide hardship grant program, which helps low-income families pay overdue water and wastewater bills in emergencies. The company also will increase eligibility for hardship grants from 200% to 250% of Federal Poverty Income Guidelines.
The water company also will introduce a formal program for payment arrangements for commercial customers, which used to only be available to residential customers.
Butler Mayor Bob Dandoy said the city had pushed for some type of financial aid program to be included in the sale terms.
“I think that's great, I think it's something that had been a consideration since the first day we talked about this,” Dandoy said. “The agreement to scale back a little on rate increases was also welcome.”
Dandoy said many people he has spoken with about the sale have been concerned about their bills being higher after the authority is sold. He said even if it wasn’t sold, the authority would likely have to raise rates eventually to fix infrastructure problems with the water system.
“People were concerned about rate increases — I was concerned,” Dandoy said. “Because of the infrastructure improvements that are desperately needed, that had to happen.”
Dave Zarnick, chairman of the Butler Township commissioners, said BASA has one of the lowest wastewater rates in the state.
“The time has come now where we have to upgrade and improve our infrastructure, and BASA just does not have the money,” Zarnick said. “We are all going to have our rates increase; every customer is going to receive equal benefits.”
Sybert said the sale of the authority could close in October, and the PUC could make its decision on the sale soon after. Sybert also said that everyone on the BASA board is a customer who will be affected by the sale, as will every member of the township and city councils that are involved in the sale decision.
“The better customers are served, the better we feel about it,” he said.
Gallagher said that although it remains to be seen if Center or Summit townships will receive any of the money from the sale, the supervisors have the impression that they influenced the outcome of the settlement.
“If Center and Summit hadn't gotten involved, in my opinion, I don't think the (Office of Consumer Advocate) would have taken it as far as it did,” Gallagher said.
