House committee will consider legislative package to amend Act 12 requirements for sale of water & wastewater systems

HARRISBURG, Dec. 7 – Members of the House Democratic Caucus will hear testimony about their bill package to reform Act 12 of 2016 at a public hearing of the House Consumer Protection, Technology & Utilities Committee at 10 a.m. on Dec. 12 in the state Capitol building.

The committee’s chair, state Rep. Rob Matzie, D-Beaver, recently introduced the legislation along with Reps. Lisa Borowski, Carol Kazeem, Leanne Krueger, and Jennifer O’Mara, all D-Delaware; Liz Hanbidge, D-Montgomery; and Christina Sappey, D-Chester.

The package of bills is designed to place much-needed guiderails on Act 12 of 2016, which made significant changes to the way water and wastewater systems are valued for acquisition. The intent of Act 12 was to provide incentives for regulated public utilities to acquire failing or stressed municipal systems that could no longer provide safe, reliable service to their customers. However, it has led to many unintended consequences – most notably the uncontrolled rise in rates as companies who buy these systems try to recoup costs from consumers.

The legislation is comprised of four bills:

  • House Bill 1862 – Would impose new notification requirements on both buyers and sellers following the formal inception of a sale.
  • House Bill 1863 – Would remove the current PUC evaluation deadline of six months, giving the commission more time for review and to collect and consider input by consumers.
  • House Bill 1864 – Would ease the burden on consumers by requiring utilities to spread out increased costs gradually, rather than all at once.
  • House Bill 1865 – Would permit struggling systems to be acquired at the current levels but would limit the amount on acquisitions of healthy systems, by capping the acquisition amount at 125% of the depreciated original cost. Part of the problem is municipalities were selling non-distressed systems to raise capital; this measure would help ensure that sellers are not just selling to get a huge payday at the expense of consumers.