As MoreThanTheCurve.com has reported, Plymouth Township’s Council is considering selling its sewer system to fund major renovations to its township building off Belvoir Road in Plymouth Meeting. A 2016 law has led numerous municipalities to sell or considering selling its systems to fund various projects without having to raise taxes.
The eventuality for the customers of the new owner of the system is a significant increase in rates. Plymouth Township’s solicitor, Michael Clarke, who also represents the Conshohocken Sewer Authority, put out a press release titled “Rudolph Clarke Attorneys Prevent Privatization of Sewer System” after the Conshohocken Sewer Authority purchased West Conshohocken’s system. The press release makes the claim that the public purchase of the system protected customers from a rate hike. From the press release (note the Mike and Lauren mentioned are Michael Clarke and Lauren Gallagher of Rudolph Clarke):
In guiding the Borough of Conshohocken Authority in its successful bid for the West Conshohocken sewer conveyance system, Mike and Lauren helped prevent significant increases in sewer rates, as is the case when public utilities become privately owned.
The press release is correct that private ownership of systems is driving up the cost to consumers. Philly.com published an article on September 5th that details the impact on customers when a municipality sells its sewer system. Here is what the article details about Limerick Township:
Limerick Township in July closed the sale of its municipal sewer system to Aqua Pennsylvania Inc., generating a $75.1 million windfall for the Montgomery County town. Limerick will use the proceeds to pay for several high-profile projects, including a new township building and two upgraded fire stations — without raising property taxes.
But Pennsylvania’s Office of Consumer Advocate estimates that Limerick’s 5,400 customers will pay dearly for the acquisition, and are facing an 84 percent bill increase, to $70 a month, after a rate freeze is lifted in 2020. Aqua’s customers outside Limerick are also expected to subsidize the purchase for more than a decade before realizing a tiny financial benefit from the expansion.
Limerick is not alone.
While The Philly.com article supports Clarke’s claim that private ownership leads to significant rate hikes, the article also shows this also happens when a public entity is the purchaser. From the Philly.com article:
But some larger government-owned utilities have also become targets of the same criticisms of inflicting rate shock on customers of smaller systems they’ve acquired, sometimes after outbidding private rivals.
The Bucks County Water and Sewer Authority in 2015 outbid private operators to acquire the sewer system in Springfield Township, Montgomery County, for $16.5 million. Springfield used the proceeds to pay for parks and a new municipal campus.
But the invoice came due this year when residential sewer bills jumped by 115 percent, matching the rates paid by other BCWSA customers. The authority says its rates are still better than those charged by private companies.
“It was a sleight of hand, a tax increase by another name,” said Jonathan Cobb, a Springfield commissioner who called the sewer-system sale a “shortsighted gimmick” when he won election in 2017. “I’d much rather have the asset under control of the township.”
You can read the full Philly.com article here.