Pennsylvania American Water Expands Wastewater Footprint with Municipal System Acquisition in Cumberland County
October 31 2016 - 10:53AM
Business Wire
$23 million transaction enables New Cumberland
Borough to eliminate all debt
Pennsylvania American Water, a subsidiary of American Water
(NYSE: AWK), announced today that it has acquired the wastewater
system assets of the Borough of New Cumberland in Cumberland
County. The purchase price is approximately $23 million.
The newly acquired system provides wastewater service to
approximately 3,100 customers. Pennsylvania American Water already
provides water service for the Borough’s residents and
businesses.
“We are very pleased to close another significant acquisition
that further expands our wastewater footprint,” said Pennsylvania
American Water President, Kathy L. Pape. “The purchase not only
provides long-term wastewater solutions and financial benefits for
the local community, but it also aligns perfectly with our existing
water service territory.”
In addition, Pape said four Borough employees who operate the
wastewater system have been offered employment with Pennsylvania
American Water.
“Thanks to this transaction, all of the Borough’s outstanding
debt, currently $16 million, will be eliminated by retiring the
general obligation bonds,” said New Cumberland Borough Council
President Jack Murray. “The Borough not only receives 100 percent
of the net sale proceeds, but we will also be relieved of all
future wastewater treatment costs and capital investments to comply
with increasing government mandates.”
As approved last week by the Pennsylvania Public Utility
Commission (PUC), the company has adopted the Borough’s existing
wastewater rates for customers served by the Borough’s system,
although such rates will now be billed on a monthly rather than
quarterly basis. The company’s wastewater tariff on file with the
PUC will apply with respect to all other rates of service, as well
as all rules and regulations of service.
Additionally, the company agreed that no rate changes may be
proposed by the company to take effect on customers’ bills prior to
January 1, 2018. The PUC regulates the company’s rates, rules and
regulations of service; so any future rate change will need to be
reviewed and approved by the PUC.
Pennsylvania American Water also committed to invest $2 million
in wastewater and/or water improvements within New Cumberland over
the next five years. The company will partner with Borough
officials to identify areas where aging wastewater and water
facilities can be replaced in conjunction with street and sidewalk
improvements.
This acquisition is the company’s latest in a string of larger
municipal wastewater acquisitions. On December 22, 2015,
Pennsylvania American Water acquired the wastewater assets of
Fairview Township, York County. The company also signed agreements
earlier this year to acquire the wastewater assets of the Scranton
Sewer Authority and the Municipal Authority of the City of
McKeesport, both of which are pending regulatory approvals.
Pennsylvania American Water currently operates wastewater systems
in Adams, Beaver, Butler, Chester, Clarion, Cumberland, Monroe,
Northumberland, Pike, Washington and York counties.
Pennsylvania American Water, a subsidiary of American Water, is
the largest investor-owned water utility in Pennsylvania, providing
high-quality and reliable water and/or wastewater services to
approximately 2.3 million people. Founded in 1886, American Water
is the largest publicly traded U.S. water and wastewater utility
company. Marking its 130th anniversary this year, the company
employs more than 6,700 dedicated professionals who provide
regulated and market-based drinking water, wastewater and other
related services to an estimated 15 million people in 47 states and
Ontario, Canada. More information can be found at
www.amwater.com.
This release contains forward looking statements, including,
among others, our plan to continue our long-term strategy of
capital investment in our systems. There are important factors that
could cause actual results to differ materially from those
expressed or implied by such forward-looking statements including:
general economic business conditions, unfavorable weather
conditions, changes in regulations or regulatory treatment and
availability and the cost of capital. We undertake no obligation to
publicly update or revise any forward-looking statement.
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version on businesswire.com: http://www.businesswire.com/news/home/20161031005721/en/
Pennsylvania American WaterTerry MaenzaT: 610-670-7789 ext.
1009M: 610-849-6484terry.maenza@amwater.com
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