Township eyes selling sewer system
Bids are expected at the end of March
Township supervisors are exploring the possibility of selling the sewer collection system to a utility company.
A decision is unlikely before May or June, according to Township Manager Eugene Briggs.
The process began at the July 11, 2022, board meeting when the supervisors hired a team of consultants, including PFM Financial Advisors, to explore the issue.
The first presentation on the matter was made at the Jan. 13 meeting and at the Feb. 13, the board voted to issue a request for bids on the system, said Briggs.
Those bids are due by the end of March and will be examined “to see if we have any viable offers” and used to help determine whether to move forward with a possible sale, Briggs said.
“There has been no decision on whether to keep or sell the system,” Briggs told MediaNews Group.
Similar to Upper Pottsgrove Township, which finalized the sale of its sewer collection system to Pennsylvania American Water in June 2022, East Coventry’s system is a collection system only, and the township does not own or operate a treatment plant. Rather, it sends its sewage to North Coventry Township, which does operate a sewage treatment plant, and pays for the service.
Most of the township’s homes operate using on-lot septic systems and the collection system has roughly 1,100 customers, mostly along the Schuylkill River, grouped between Route 724 and Pigeon Creek, Briggs said.
The system is maintained by the township’s public works department, which has a staff of five, four of whom are certified sewer operators, said Briggs. One of the provisions of the sale, according to the study presented in January, is that no township employees would lose their jobs as a result of the sale.
The presentation also indicates that the township intends to hold “public information sessions to discuss the potential sale.” None have been scheduled yet.
Any bid is likely to include some kind of rate freeze for one or two years. Currently, East Coventry sewer customers pay a flat fee of $185 per quarter.
Bidders also will be asked to provide non-binding estimates of their rates through 2033.
However, as the presentation noted, rates for regulated utilities are ultimately determined by the Public Utility Commission. In the case of Upper Pottsgrove’s system, rate estimates provided by Pennsylvania American Water before the sale ended up being much lower than what they turned out to be. The utility had requested a 24.9 percent sewer rate increase, but in December, the PUC approved rates even higher than requested — 39.1 percent.
For 18 months, since July of 2021, Upper Pottsgrove sewer customers had enjoyed a reduced rate of $195 per quarter. But the 39.1 percent increase that went into effect recently raised rates by $76 to $271 per quarter.
Pennsylvania is seeing a growing trend in which large privately-held utility
companies are buying up municipal water and sewer systems.
In May 2021, the sale of Royersford Borough’s sewer system to Pennsylvania American for $13 million was finalized. That system serves nearly 1,600 customers in Royersford and a portion of Upper Providence Township,
In 2018, Exeter township supervisors voted to sell the sewer system there to Pennsylvania American for $96 million.
That same year, Limerick Township completed the sale of its sewer system to Aqua PA for $75 million.
The wave of system
sales came in the wake of a change in Pennsylvania law dealing with how the value of such facilities is calculated.
Enacted in 2017, Act 12 allows municipalities that own water and wastewater systems to sell their systems to regulated public utilities at a fair market valuation.
As noted in the presentation by PFM, which also advised Upper Pottsgrove on the sale of its system, municipalities that have sold their systems have used the proceeds for major capital projects, to stabilize pension systems and retire debt.