Water Industry News

Pennsylvania authorities unite against Aqua America

By Veronica Torrejón

October 20, 2005

The Lehigh County Authority has joined with South Whitehall Township's water authority to try to block water-giant Aqua Pennsylvania Inc. from gaining a toehold in the county by buying a small water company.

Aqua Pennsylvania filed an application with the state Public Utility Commission to purchase Country Club Gardens Water Co. for $100,000. The company provides water to 415 homes in Salisbury, South Whitehall and Lower Macungie townships.

The sale would be the first successful attempt by Aqua Pennsylvania to buy a water system in Lehigh County. Emmaus previously had decided not to privatize its system.

Responding to the public notice of the sale on Oct. 7, the LCA voted to join South Whitehall's authority in filing a protest with the PUC before the Oct. 24 deadline.

''The authority has decided to protest the petition because it would be in the best interest of the communities to be served by the existing authorities,'' said Aurel Arndt, general manager of the Lehigh County Authority.

PUC approval is the first step to the acquisition by Aqua Pennsylvania, a subsidiary of the nation's largest publicly traded water company, Aqua America Inc. Headquartered in Bryn Mawr, Aqua America serves about 1.3 million customers in Pennsylvania, spokeswoman Donna Alston said.

While the LCA never negotiated to buy Country Club Gardens Water, Arndt said the authority had expressed interest in the company's holdings over the years.

The LCA would be able to provide lower rates to customers, he said.

''They are a stockholder-owned company and they generate profits,'' Arndt said of Aqua Pennsylvania. ''As a public entity, we are able to obtain tax exemption. All of the revenues that we generate from our system go into the operation maintenance.''

The application asks that rates remain the same for Country Club Gardens customers, who pay about $233 a year for 60,000 gallons used.

Aqua Pennsylvania calculates rates based on a statewide model, Alston said. The statewide rate for 60,000 gallons is about $480 a year. So, while customers would not see an immediate increase, rates eventually would rise.

The advantage to the takeover would be the company's ability to invest in system improvements, said Keith Gabage, director of corporate development. Those improvements ensure water quality meets increasingly stringent federal standards.

Gabage said rates often are kept low by municipalities that make investments to water systems using revenue from other sources.

''You can't keep your rates stagnant forever,'' he said. ''You have to make rate increases. If you don't, those rates are artificially low.''

And unlike municipal systems, Gabage said, Aqua America has engineers and environmentalists on staff to provide professional oversight.

What they lack is local presence, South Whitehall Manager Gerry Gasda said. ''I understand they are a good company,'' he said. ''But we have a water crew here on hand. We have a work force that is ready and waiting and based locally.''

Local water authorities also have multiple wells to rely on in the event of contamination, Gasda said. ''The bottom line is, if something were to happen like that in a private system, they don't have other sources of water to go to.''

South Whitehall Township's water authority negotiated with Ralph Uff in 2002 to purchase a portion of the water rights to Country Club Gardens and the community of Springhouse Farms, which are in the township, Gasda said. They failed to reach an agreement on price, he said.

Catherine Uff, who heads Country Club Gardens Water Co., along with her husband Ralph, 72, disagreed.

The authority, she said, never approached them about purchasing their entire holdings. Uff said the last communication she and her husband had with South Whitehall Township was a letter stating the township lacked the funds to purchase a portion of their company.

For decades, the Uffs almost single-handedly have run the operation, answering phones, repairing water lines, reading water meters and billing customers. Although Country Club Gardens Water is a corporation, the Uffs are the two working members. Now, the couple say, they are ready to retire.

''It's very hard. It's taken a year of thinking about it,'' said Catherine Uff, 69. ''But it's a 365-day-a-year job and 24 hours a day. We can never go anywhere without beepers and radios.''

Uff said she felt safe leaving her customers in the hands of Aqua Pennsylvania.

Furthermore, she said dividing their holdings would not be practical.

''That would be so difficult for us to divide this company into three different parcels and try to negotiate with three different townships. That wouldn't be workable for anyone,'' she said.

Paul Marin, who led opposition to privatization in Emmaus, on Tuesday contacted residents of the three communities to warn them of the impending sale.

Marin said he fears that once Aqua Pennsylvania gets a toehold in Lehigh County, it will try to spread its holdings in the area. His sentiments were echoed by Arndt, who said Aqua Pennsylvania and Aqua America have a history of acquiring small systems and then using those as a basis to expand their holdings.

''The reason I am very passionate about this is because I view water like air, as a right to life, not a commodity,'' Marin said.

Among those Marin contacted were several residents who live in the same community as the Uffs, including David Dunbar.

''Philosophically, I think water should be publicly owned by communities, but we live in the same neighborhood with the owners � and I'm reluctant to start a war here,'' Dunbar said. ''They have served us well and worked hard over the years.''

Dunbar, 73, said he would prefer the LCA take ownership of the company, but he also respects his neighbors' decision to sell to the highest bidder.

''They don't have to do this forever. They have a right to retire, and they should get a fair price for their property,'' he said.

The authorities' protests have yet to be filed with the PUC, spokeswoman Page said.

If the protests are filed, the application will go before an administrative law judge who would hold a hearing and make a recommendation. The commission then would decide to reject or approve the sale.