Selling Municipal Wastewater System – Not always a “substantial affirmative public benefit” according to recent PA Commonwealth Court Decision
By: Kimberly P. Venzie, Esquire
In the Cicero v. the Pennsylvania Public Utility Commission (“PUC”) decision (No. 910 C.D. 2022) rendered on July 31, 2023, the Commonwealth Court determined that the PUC abused its discretion in concluding that Aqua Pennsylvania Wastewater, Inc. (“Aqua”) had established substantial affirmative public benefits that outweighed the known harms from the sale of East Whiteland Township’s wastewater system (the “System”) to Aqua. The Court noted throughout the decision that the Township was already providing safe and reliable wastewater service, had the means to continue to provide reliable service, had capacity to meet the demand of current and future customers, as well as the financial ability to provide needed future upgrades to the System without Aqua’s assistance or purchase of the System. Although Aqua was agreeable to freezing the System customers’ monthly rate for the first three years after purchase, after that time, the rate could increase by 132.93%. The Court questioned the “substantial affirmative public benefit” being achieved by transferring a healthy and viable Township wastewater system to Aqua which would only result in a much higher rate to customers. Aqua’s large size, technical and financial fitness are factors to be taken into consideration when approving such a transaction; however, it does not replace the “affirmative public benefits test” as established by the Pennsylvania Supreme Court (based upon statutory provisions of the Public Utility Code and as interpreted in caselaw) which requires a showing that the proposed transaction will “affirmatively promote the service, accommodation, convenience or safety of the public in some substantial way.” In the instant matter, the Commonwealth Court failed to see how a transaction that will provide the same services that are already being provided could be a benefit, “let alone a substantial affirmative public one as required by statute and our caselaw.” The Court reversed the PUC’s decision to approve Aqua’s acquisition of East Whiteland Township’s wastewater system in this strongly worded decision emphasizing that simply because Aqua is a large and sophisticated entity does not mean that Township assets can or should be transferred particularly when the Township’s assets are robust and functioning well.
The above is intended to provide the highlights of the case and does not provide full citations. Please click on the below link for the full case and related citations. Kim Venzie, Esquire of our firm can be reached at firstname.lastname@example.org or via phone at (610) 235-0238 for more information on this case, or other legal assistance.