Daily Local News (West Chester, PA)
Aqua’s application to acquire utility on hold
Pending Chester’s bankruptcy petition
Hearings before the Pennsylvania Public Utility Commission regarding Aqua Pennsylvania Wastewater’s application to acquire DELCORA scheduled for Feb. 14 and 15 have been canceled.
On Friday, the office of Receiver Michael T. Doweary filed a motion in bankruptcy court seeking a stay in the proceedings.
On Monday, Administrative Law Judge F. Joseph Brady agreed, putting the Aqua Wastewater application on hold until the Chester bankruptcy is finalized and another related matter in Delaware County Court of Common Pleas is finalized.
“We’re pleased with the decision and the receiver will continue to ensure that Chester’s rights are protected in any sale,” Vijay Kapoor, Doweary’s chief of staff, said.
Samantha Newell of the Rudolph Clarke LLC team representing DELCORA provided a statement.
“We have reviewed the decision of the Administrative Law Judge,” it read. “We have not yet had the opportunity to review the implications of the decision with the DELCORA Board of Directors and until such time as we do, we have no further comment.”
Aqua also released a statement following the stay order.
“Aqua Pennsylvania disagrees with this interim order and will ask the Pennsylvania Public Utility Commission to proceed with the approval process for DELCORA,” it read. “We believe we are the right partner for DELCORA, and we’re committed to working toward a positive result that will benefit Delaware County residents.”
DELCORA treats wastewater for approximately 500,000 customers in 46 municipalities in Delaware and Chester counties. Each day, it collects and conveys an average daily wastewater flow of approximately 60 million gallons.
Long road to now
This matter began in September 2019 when Aqua Pennsylvania signed a $276.5 million asset purchase agreement with the Delaware County Regional Water Quality Control Authority in a move the parties said would push back looming infrastructure costs for customers over the next decade.
A 2019 Aqua appraisal for DELCORA valued the system at $408 million.
As part of the agreement, DELCORA planned to place the proceeds of the transaction into a trust to provide payments to customers to assist with future bills, in essence, stabilizing the rates.
In May 2020, Delaware County Council filed a complaint in Delaware County Court of Common Pleas maintaining that DELCORA had violated the terms of the Municipality Authorities Act in establishing this trust. This matter was eventually appealed to Commonwealth Court.
That same month, the county filed an application to intervene in the PUC proceedings, stating that Aqua’s pending acquisition was not in the best interest of the public.
In 2021, a panel of administrative law judges recommended that the PUC reject the sale of DELCORA to Aqua. On March 30, 2021, the PUC vacated that recommendation and remanded the matter to the administrative law judge for further proceedings.
On April 16, 2021, Brady stayed those proceedings. Eleven days later, Aqua filed a petition seeking a lift of the stay.
Seventeen months later, in July 2022, the PUC lifted the stay and directed the administrative law judges to promptly schedule the hearings. In October 2022, Brady released a schedule, including hearings to be held Feb. 14 and 15 of this year.
On Jan. 18, DELCORA filed a complaint in Delaware County Court for declaratory judgment, naming Delaware County and Aqua as defendants.
On Friday, the Chester receiver filed a petition in the U.S. Bankruptcy Court for the Eastern District of Pennsylvania for an automatic stay of proceeding before the PUC. In November 2022, the receiver had filed for Chapter 9 bankruptcy so that Chester could resolve its financial debts and disputes.
Kapoor spoke to Friday’s action.
“The receiver filed this motion to protect the city’s rights regarding its sewer assets in the event that DELCORA is sold,” he said. “The receiver tried to intervene in the PUC matter on behalf of the city, but was denied by the PUC. Consequently, he had no choice but to take this matter to the bankruptcy court.”
In filing the petition, Doweary wants to protect the city’s reversionary interest in the sewer assets based on language in the 1973 agreement creating DELCORA. Although based on this, the wastewater treatment plant would not revert, the pipes that take the wastewater to the treatment plant would.
On Monday, Brady ordered the stay, cancelling the Feb. 14 and 15 hearings. In addition, he ruled that the parties including Aqua and DELCORA should file status reports every 90 days until the stay has been lifted.