County council approves trust fund of sewer agency to Aqua
MEDIA » Delaware County Council unanimously approved a rate-stabilization trust that DELCORA plans to establish to reduce increases for ratepayers upon the conclusion of the authority’s sale to Aqua Pennsylvania Wastewater.
Republicans John McBlain, Colleen Morrone and Michael Culp voted in favor of the measure. Democrats Kevin Madden and Brian Zidek were not present. Madden allegedly was in the Government Center complex and told staff to proceed without him.
The act had no bearing on the actual sale to Aqua. The motion before council was solely to allow DELCORA to amend its bylaws to allow for the creation of the trust or non-profit to stabilize rates.
DELCORA officials were pleased by the action.
“We think what makes our transaction so unique is because the proceeds are going to be used for something positive - the ratepayers, to keep costs under control,” Dave Nasatir, an attorney representing the Delaware County Regional Water Quality Control Authority, said. “This has never been done before. This is the first time, the first time to create a rate stabilization trust.”
In September, DELCORA unanimously approved a $276.5 million merger with Aqua Pennsylvania Wastewater after a nine-week due diligence period. According to the authority, the sale was meant to help offset $1.2 billion in new and ongoing capital costs, and save the average retail customer $1,400.
Nasatir said those costs would be realized by whomever was at the helm of this system.
“Anybody who owns that system has to do it,” Nasatir said. “In those really tough years, there will be a rate stabilization trust in place to soften the blow.”
The attorney said this rate-stabilization trust is meant to reduce the costs of ratepayers so that they will only see a 3 percent increase per year until the fund is depleted, which is anticipated to be around a decade.
Then, he said, the rates will increase to whatever they are set by the Pennsylvania Public Utility Commission.
County council had had a first reading of the ratepayer trust fund earlier this month. It then voted on it but due to advertising requirements and a mishap in the Delaware County Daily Times, a special meeting to vote had to be scheduled to meet the standards.
At Wednesday’s meeting, no one spoke during the public comment sections and McBlain directed that council’s previous comments be incorporated into the record.
Two weeks ago, he highlighted what he saw as strengths from this.
“(T)he money will be placed in a trust and will go toward lowering the rates to ameliorating any proposed increases in the future, at least over the next 10 or 11 years,” he said at the time. “That will protect the ratepayers in all of Delaware County and at the same time, enable our wastewater treatment facilities to be brought up to the standards that have now been implemented by the federal government or the state.”
At that meeting, Zidek disagreed, adding that he believed it to be a violation of the Municipal Authority Act.
“I think the members of the DELCORA board who have voted in favor of this transaction and continue to work for its implementation have breached the fiduciary duty they owe to DELCORA and the citizens of Delaware County by extension ... I think it does a disservice to all of the citizens of Delaware County who are served by DELCORA.”
On Wednesday, Nasatir said it was his opinion that the action was in alignment with the Municipal Authority Act and lauded council’s action to allow for the establishment of a rate stabilization fund.
“Otherwise, the proceeds could technically be used for anything,” Nasatir said. “Previously, people sold systems because they needed to replenish funds for rainy days or build township buildings or had pension deficiencies. This is actually going right back to the ratepayers so this actually makes this really, really unique.”
The attorney anticipated that closing could potentially occur within the next year. The next step is approval by the PUC.