The Pennsylvania Public Utility Commission in a 3-2 decision Thursday, Nov. 9, approved the $230 million sale of Butler Area Sewer Authority to Pennsylvania American Water.

The tiebreaking vote came from PUC chairman Stephen M. DeFrank, granting the PUC’s approval of the Pennsylvania American Water’s application for the sale, despite the contrary advice of an administrative law judge.

Ralph Yanora and John Coleman Jr. approved the transaction, while Kimberly Barrow and Kathryn Zerfuss said they disapproved of the sale.

BASA provides sewer service to about 15,000 customers in a 32.5-square-mile area that includes the city of Butler, Butler and Center townships, East Butler, and parts of Connoquenessing, Oakland, Summit and Penn townships.

“It's a great day for BASA customers, people of the city, the township,” said Butler Mayor Bob Dandoy.

He and Dave Zarnick, Butler Township commissioner chairman, said Thursday morning the sale’s approval was historic for the region and customers of the authority.

The approval from the PUC makes the sale official, but city and township leaders said more work needs to be done.

“We have a call sometime today,” Zarnick said. “There is a lot of work ahead.”

Michael Gallagher, solicitor for Center and Summit townships, said both sets of supervisors were disappointed in the approval of the sale. Both townships previously filed motions against the sale, in part because they each have a large base of BASA customers in their municipalities, but would see none of the sale money from the water company.

“On behalf of the supervisors, we wish to thank the many offers of support and encouragement that we received from rate payers in the BASA system,” Gallagher said. “We know too, that they will be disappointed.”

The BASA board of directors, on the other hand, thanked the PUC for approving the sale.

“We are grateful to the PUC for its decision and thankful to the many residents who stayed so engaged with us throughout this very public process,” said Paul Sybert, BASA chairman.

In a statement read at the Thursday meeting, DeFrank explained his support for BASA’s sale by highlighting how it differed from another recent purchase request in Chester County.

“In particular, I note that this matter is distinguishable from the matter involving the recent proceeding involving Aqua Pennsylvania’s filing to acquire (the sewer system in) East Whiteland Township in Chester County,” DeFrank said.

In August, the Pennsylvania Commonwealth Court reversed an order from the PUC, which had approved Aqua Pennsylvania’s $54.9 million acquisition of East Whiteland Township’s sewer system.

In his Thursday statement in support of the sale of BASA, DeFrank noted “affirmative benefits for residents,” including enhancements to the low-income program outreach efforts, an increase in a Hardship Fund totaling $3.5 million and the inclusion of commercial customers in payment arrangements.

DeFrank said another difference between the Butler County and Chester County sales is that BASA is under a corrective action plan with the state Department of Environmental Protection.

Further comparing Butler County’s situation to that in Chester County, DeFrank said the sewer system’s sale in Chester County was “fully litigated.” The BASA sale came to the PUC as the result of a settlement, he said.

In August, Center and Summit townships discontinued plans to contest the sale in a settlement that adjusted the purchase price to $230 million from the initial $231.5 million and set limits on rate increases. According to the settlement, Pennsylvania American Water can only increase wastewater rates by up to 1.4 times the current rate in the year after closing the sale or on Jan. 1, 2025 and only recoup $228 million through customer rates.

“While standing alone this fact would not be sufficient to warrant granting the application, however, it is another factor that distinguishes this matter from East Whiteland Township and further supports reversing the recommended decision and granting the application,” he said.

In September, administrative law Judge Marta Guhl reviewed the BASA sale and issued an opinion saying BASA should not be sold to Pennsylvania American Water.

Guhl wrote the cost to BASA customers is cause to not recommend the sale.

Barrow, the PUC’s vice chairwoman, offered a different opinion than DeFrank. Before voting against the sale, she said the harm — most notably “substantial rate increases” to acquired and existing customers — outweighed the benefits.

“The Butler area customers, they may get better service. I am pretty sure they will, but I also see in this record that the municipality has the ability to improve that service and the infrastructure without impacting rates to the degree that this transaction will,” Barrow said.

She recognized that Pennsylvania American Water could likely follow through with the DEP’s corrective action plan faster, but said the plan could be completed at an acceptable pace without the sale.

She also noted the money will be split between Butler city and Butler Township and will help them clear debt and set them up for success.

“The number of the benefits to this transaction exceed the number of the harms to this transaction, but they do not outweigh the harms, in my opinion,” she said. “The majority of the benefits of this transaction go to the municipality.”

These benefits come at a cost to customers, she said.

“The rates will increase from $43 to $45.50 per month prior to the closing. One year after it’s $63.70 … and then it won’t stop there,” she said.

She said the rates would likely increase to Pennsylvania American Water’s standard rates, currently $106 a month.

Existing Pennsylvania American Water customers will also pay a price, she said, noting that as part of the settlement agreement, the water company can recoup only $228 million through customer rates, meaning the overall cost to be recovered in future rates will be lower.

“Existing PA American Water customers will have to subsidize this because of the rate cap,” she said.

Gallagher watched the discussion of the sale unfold on a livestream.

“It is interesting to note that during the discussion between the PUC members, the two dissenting voices in favor of the rate payers acknowledged the substantial negative impact the sale will have upon working class and economically disadvantaged families, for whom sewage is a necessity,” he said. “From a legal perspective, the dissent pointed out that the decision of the majority of the PUC, was contrary to the recent decision of Commonwealth Court in a similar matter, resulting in the Commonwealth Court reversing the PUC.”

Gallagher said supervisors in Center and Summit Township were notified of the vote and would receive and review the written opinions and dissents within the next few days.

“We will then meet with the supervisors and discuss the challenges involved in taking an appeal to the Commonwealth Court,” he said. “The supervisors will ultimately have to make that decision within the next 30 days.”

Despite the approval of the sale, the municipalities are not counting on having their share of the money available immediately, or even as soon as next year.

“One of the things we told all the city departments is we have to plan as if this money wasn't coming,” Dandoy said. “That's what we have done, we are ready to move on the budget. Right now, we are moving forward like we always have.”

Eagle Staff Writer Eddie Trizzino contributed to this report.