Pennsylvania American Water completes purchase of BASA wastewater system
BUTLER TWP — After nearly three years of negotiations and long waits for decisions from state authorities and court proceedings, Pennsylvania American Water closed on the purchase of Butler Area Sewer Authority as of Tuesday, Oct. 29, and will immediately take over wastewater operations.
On Tuesday, officials involved in the sale met at the Butler Area Sewer Authority on Litman Road to discuss the impact of the sale on customers, the wastewater system, and Butler and Butler Township, which will split the $230 million in sale proceeds.
The wastewater system serves more than 15,000 customer connections across 32.5 square miles, including Butler; parts of East Butler; and portions of Butler, Center, Connoquenessing, Summit and Oakland townships.
Among those in attendance at the Tuesday meeting were Justin Ladner, the president of Pennsylvania American Water, Butler Mayor Bob Dandoy, Butler City Councilman Don Shearer, Butler Township Commissioners Chairman Jim Lokhaiser and township Commissioner Vice Chairman Sam Zurzolo.
Although the public utility is now owned and operated by a private company, Ladner said the regular communication that has been in place between Pennsylvania American and the local government over the past several years will continue. The lengthy process it took for the company to acquire BASA, coupled with Pennsylvania American Water’s prior presence in the area, had Ladner convinced communication would remain strong between customers and the company.
“By nature of being an investor-owned utility governed by the (Pennsylvania) Public Utility Commission, there are a lot of avenues for customers to voice any feedback they would like,” Ladner said. “Butler, to the point about local representation, will be a district for operations, and they will have their own level of supervision in terms of management structure.”
Talks first began between Pennsylvania American Water and BASA in 2022, when the water company began evaluating the BASA system and its 60-year-old plant on Litman Road.
The authority’s five-person board of directors voted unanimously at its October 2022 meeting to approve a resolution to accept the water company’s $231.5 million offer for the authority, its treatment plant and all other assets, infrastructure and equipment. The resolution kicked off the process which required approval from the Public Utility Commission, which was granted in 2023. The completion of the sale was further delayed by an appeal from Center and Summit townships which objected to the sale in part because they would not receive the sale proceeds, despite each having a customer base.
The appeal was denied in September, and Butler Township and Butler moved on the sale earlier this month.
“It has been very lengthy,” Dandoy said. “It was a real learning experience. Frustrating at times? Profoundly. But at other times, kind of exhilarating.”
As part of a settlement agreement approved by Butler, Butler Township, BASA, Pennsylvania American Water and Center and Summit townships in 2023, the water company can recoup only $228 million through customer rates. Butler and Butler Township will split the proceeds from the sale, following payments of debts and other costs.
After getting initial approval for the sale, Butler and Butler Township officials began planning for the money’s storage and continued use, with Butler City Council opting to hire a financial adviser to help manage the money.
Lokhaiser said Butler Township also plans to save most of the money, but will use some of it for high-priority projects, including the completion of an athletic complex at Pullman Center Business Park and fixing the lake in Preston Park.
“We’re going to bank most of the money; we have to pay off our municipal building, about $1.3 million,” Lokhaiser said. “If we would continue payment, it would go through 2029.”
Dandoy said that while money will be saved in a separate account, some of it will be used on long-awaited projects in the city, including Father Marinaro Park upgrades and a sidewalk project on Main Street.
“There has been a lot of stuff because of the financial woes of the city that we have procrastinated on,” Dandoy said. “Now, we’re sitting here, and we’ve got to take care of these things; things like we want to redo the parking system in this city.
“It’s going to be an exciting day for the City of Butler.”
According to Ladner, Pennsylvania American Water has had its engineers at BASA’s site over the past month to evaluate the wastewater system, and integrate the authority’s most recent Corrective Action Plan into its own planning for the future. Municipalities are required by the Pennsylvania Department of Environmental Protection to have a corrective action plan in place to address public sewage needs.
“Our engineering leadership will integrate BASA’s projects into our plan, so we do these five-year capital plans where we target and we rank all the investments needed by risk categories,” Ladner said. “Those projects are going to fold into that analysis, and we’ll create our own plan for BASA, but those projects will be integrated.”
Over the course of the sale negotiations, BASA officials said the wastewater system was in need of major upgrades — which Ladner said Pennsylvania American Water is prepared to take on.
“We’re committed to invest $75 million into the infrastructure over the next five years, and that’s based on what we know needs to be done to bring it into compliance,” Ladner said. “We’ve actually had an engineer on site here for over a month to help with that transition.”
Despite the costly investment needed for the system, Ladner said purchasing BASA was appealing the the water company because it already has provided service in the region, making its entrance into a new foray a potentially easier transition. Customers of Pennsylvania American Water who are within the service area of both systems will receive one bill for both services starting next billing cycle.
The transition was aided further because Pennsylvania American offered all of BASA’s staff a job with the company, with a majority of its employees accepting, according to Ladner.
Additionally, the water company is increasing its financial aid for customers, expanding eligibility for customers to receive funding. Customers of Pennsylvania American Water’s water service who are already getting financial aid will also be rolled into the financial aid programs they are eligible for.
“Tied to this closing is a commitment to infuse $3.5 million into our Pennsylvania American H2O ‘Help to Others Program,’” Ladner said. “That’s larger than any other water utility, we have one of the largest-running customer assistance program, and we also increased eligibility for customers to use those funds.”
Ladner said BASA’s need for system improvements and renovations was a selling point for Pennsylvania American Water, because it could bring resources to an area that already had existing customers. He said customers may notice more people in Butler wearing Pennsylvania American Water apparel over the coming months, as workers continue operating the system under new ownership.
“This is what we do — we do water and wastewater, and I’m responsible for 2.3 million Pennsylvanians receiving that service in an environmentally-compliant manner,” Ladner said. “We want to bring our resources to bear.”
