Pennsylvania Officials Push Back On Wastewater Privatization As Ratepayers See Higher Bills
Ratepayers in Pennsylvania are now facing the financial fallout of regulations that have pushed the privatization of their sewer infrastructure.
“In many townships and counties, rates have spiked as private water companies have bought up wastewater systems from local governments,” Fast Company reported. “The new push to privatize sewer services follows the passage of a state law in 2016 that allows the dollar value of water systems to include not just pipes and plants but market factors such as their worth to the community, allowing them to be sold at much higher prices.”
Pennsylvania was a trailblazer in enacting such “fair market value” laws, which have been introduced in more than a dozen states to increase the prices for water systems. After seven years, however, Pennsylvania’s new rules are demonstrating the consequences of encouraging more private ownership of wastewater systems, particularly in rural areas.
Following dozens of buyout attempts and tens of millions of dollars offered in local water system purchases, some communities have seen their bills rise as much as 85% following private takeovers.
“Opponents of valuation laws say the measures have largely passed with little public awareness or controversy, as water companies have donated heavily to Republicans and Democrats alike,” according to Fast Company. “At the local level, residents are often unaware that their water system is up for sale until a deal is being finalized.”
As they see increased privatization hurt their constituents’ wallets, Pennsylvania officials now seem to be turning against the fair market value legislation, seeking to implement new restrictions on such acquisitions. And that change of heart could be a precursor for legislators in other places that had been following Pennsylvania’s privatization push.
“Democrats want to reform a state law that opened privatization floodgates on local water and wastewater systems in Pennsylvania, saying the law has ‘run far afield’ of its intent and that the resulting acquisitions have been poorly regulated,” per Spotlight PA. “The Act 12 reform package floated by House Democrats ‘will still permit struggling systems to be acquired at the current levels’ while also limiting acquisitions of healthy systems and providing regulators ‘with ample time to review these sales more thoroughly.’”
If the financial struggles in Pennsylvania are any indication, it seems likely that other states will revisit their own valuation laws and the impacts of privatizing drinking water and wastewater services.
To read more about how water and wastewater systems finance their operations visit Water Online’s, Funding Solutions Center.