Sewer rates to fall then rise if system is sold
UPPER POTTSGROVE » Upper Pottsgrove sewer rates would drop by about 9.6 percent if the township sells the system to Pennsylvania American Water.
However, the decrease — from the current $71.87 per quarter to $65 per month — would be shortlived, according to Bernie Grundusky, senior director for business development for the water company.
His comments and other information came out Monday night during the first of four scheduled informational meetings on the subject.
A chart he shared as part of the online meeting showed rates
would return to the current rate in three or four years and then increase annually by an average of 3 to 4 percent.
“Although you might see two or three percent,” he said.
Resident Don Clancy said a deal that lowers rates initially and then “raises rates 4 to 5 percent indefinitely is a bad deal.”
He said the best way to make an informed decision is to compare the increases Pennsylvania American projects to those the township might have to impose. “So we would need to have a look at future costs by the township and we haven’t seen that presented tonight,” observed Clancy.
“It seems like you’re pursuing a short-term fix and creating long-term problems,” said resident Al Leach, who is also vice president of the Pottsgrove School Board.
After Leach asked how Pennsylvania American’s rate projections compare to the township’s history of rate hikes, a variety of answers arose in a flurry.
Commissioner Renee Spaide said “in 2007, rates rose 72 percent in one year. I’ll just put that out there.”
Chris Pelka, the township’s sewer engineer, interjected that hike was due to the failure of the Regal Oaks pump station, part of a small private system that failed and which the state required the township to take over.
“That was forced on the township and was an unforeseen circumstance,” Pelka said.
Commissioners Chairman Trace Slinkerd then rattled through a list of rates dating back to 2008
too rapidly to accurately jot down. That list was not part of the presentation Monday night.
Former commissioner Elwood Taylor, who has raised several questions in the past about his perception that the township is pushing hard to sell the system, offered that “the rates have been relatively stable for the last 10 years.”
“If we sell the system or not, it will cost us more money,” Spaide said. “We will have to borrow money to do these projects.”
The projects to which she refers are those included in something called the 537 plan, so named after PA Act 537, the law under which sewer system capital projects are outlined.
In February, commissioners approved a bid from Doli Construction for another phase of the Regal Oaks sewer system project. The bid of $537,440 was within the budget for the project, which benefits from a $200,000 state grant to cover part of the cost.
The project will connect 26 homes on Rose Valley Road and Holly Berry Court, as well as seven homes on Gilbertsville Road.
However, according to the presentation made last night, future sewer projects in the 537 plan would be undertaken by Pennsylvania American Water, if the township sells them the system.
Phase 2B of the Regal Oaks expansion; as well as sewer service to Horsehoe and Bruce drives; as well as Continental and Old Orchard drives, would all be undertaken by the company if the system is sold.
Further, unlike when the township constructs
new sewer lines, property owners would be spared the $5,447 tap-in fee if the company undertakes the project.
Grundusky explained that the company works under a different system than the township and existing homes and businesses are not charged a fee to connect to the system.
Further, the company will even contribute $15,000 toward the cost of extending the system in the street beyond the area outlined in the 537 plan if requested by a homeowner who wants to connect.
Grundusky said a $4,000 “capacity fee” is charged to new homes and businesses built after the company buys the system, he said.
Two Bidders
Slinkerd said Pennsylvania American’s bid of $13,750,000 was about $332,000 higher than what the township had hoped to receive.
Ben Kapenstein, who works for PFM, the township’s consultant in this matter, said Aqua PA was the other company to bid and because the two bids received on March 16 came in “within 10 percent of each other, we proceeded to a phase called ‘best and final offer,’ in which we contacted both bidders and informed them they could submit higher bids if they wish.”
The final bids were reviewed during a March 25 executive session, he said.
In a physical letter sent out to residents Monday, the same day as the first meeting, and posted on the township Facebook page (but not the website), the township laid out its reasoning for considering the sale.