Planning Commission Against Dubious DELCORA Deal
The Swarthmore Planning Commission unanimously voted to disapprove the sale of the Delaware County Regional Water Authority (DELCORA) to Aqua Pennsylvania at their meeting on August 26. DELCORA, a public wastewater management utility, has proposed to sell its assets and responsibilities to the private, publicly traded corporation. Aqua PA has offered $276 million in a no-bid deal.
Commission members voiced a range of concerns about the sale.
“I would not recommend approving something that has not gone through a bid process,” said member Nancy Templeton.
Commission member Don Jones observed the irony that the pro-business Republican party, working to privatize a public utility, wanted to sell it in a private negotiation with a single buyer, for a price below fair value. “How does that benefit the public?” he asked.
“There are no real benefits to Delaware County,” said commission chair Chris DeBruyn. “I don’t understand why [DELCORA] needs to be sold in the first place.”
Swarthmore Borough Council member Betsy Larsen, who attended the meeting and who is against the sale, remarked, “Aqua is guaranteeing the DELCORA jobs.”
DELCORA welcomes the deal, despite two separate valuations estimating its worth as significantly higher than $276 million, DeBruyn told the group. The Swarthmore Planning Commission, together with the planning commissions of other local municipalities, is required to weigh in on the proposed sale.
Commission members speculated that DELCORA management — appointed by a Republican-led Delaware County Council — may not feel secure in their employment now that Democrats control the council. County council Democrats have called the DELCORA sale a politically motivated reward for board members financially supporting Republican candidates.
Profits for Aqua
The sale will benefit Aqua PA by increasing its wastewater assets by approximately 50%, DeBruyn reported. He noted that Aqua’s financing costs, and its additional corporate overhead, are significantly higher than DELCORA’s costs. This would drive additional rate increases. Also, the price paid on a per-rate-payer basis for the DELCORA assets is much lower than the per- rate-payer valuation of Aqua’s existing wastewater assets. This disparity further benefits Aqua PA.
Aqua PA has announced its intention to raise rates, should the sale go through. Company Vice President William Packer testified to the Pennsylvania Utility Commission (PUC) that rates for DELCORA customers would likely rise 12.55%. (That increase may be somewhat mitigated in the short term by funds from a trust set up as part of the deal.)
12.55% may be only the beginning. “In my view,” Swarthmore borough council member Ross Schmucki wrote in an email, “Aqua will regularly apply for additional rate increases. They will have a monopoly and profit each time they raise rates.”
Swarthmore charges homeowners $8.40 per thousand gallons of water used in the prior year, explained Borough Manager Jane Billings. An average family of four, using approximately 76,000 gallons of water per year, currently pays about $640 annually. A 12% increase would raise that cost to approximately $717 per year.
Frustration and Obfuscation
At the meeting, commission members decried the volume of hard-to-understand paperwork burying the complex terms of the proposed deal. They expressed frustration about how little their objection to the sale is likely to matter, and how hard it is to explain the deal and its likely effects to the public.
DeBruyn also noted that the complicated transaction appears designed to hide Aqua’s complete control of the sale funds after the transaction is complete. “It doesn’t seem right that Delco residents should give up the hundreds of millions of dollars in assets that they have paid for over the decades without any compensation.”
“Sewer systems are a thing that people don’t want to think about,” DeBruyn observed.
“Until they get a rate increase,” Templeton said. “Then they think about it.”
