Pennsylvania American Water Closes Acquisition of Scranton Wastewater System
December 29 2016 - 12:47PM
Business Wire
Transaction ranks among largest wastewater
acquisition in company history
Pennsylvania American Water, a wholly owned subsidiary of
American Water, announced today that it has completed the
acquisition of the wastewater system assets of the Scranton Sewer
Authority (SSA). The purchase price is approximately $195
million.
The newly acquired system provides wastewater service to
approximately 31,000 customers in Scranton and Dunmore.
Pennsylvania American Water already provides water service to
residents and businesses in both communities. The transaction
represents one of American Water’s largest wastewater acquisitions
in the parent company’s history.
“This acquisition marks a significant milestone for our company
and our employees, based on the size and scope of this wastewater
operation and the environmental challenges facing the system,” said
Pennsylvania American Water President Kathy L. Pape. “We bring both
the technical expertise and financial resources to meet these
challenges and provide a long-term wastewater solution, while
establishing a plan to maintain reasonable rates for the
customers.”
The transaction’s closing follows a lengthy regulatory approval
process by the U.S. Environmental Protection Agency (EPA),
Pennsylvania Department of Environmental Protection (DEP), the U.S.
Department of Justice, and the Pennsylvania Public Utility
Commission (PUC). The wastewater system is under an EPA Consent
Decree that mandates significant upgrades, totaling an estimated
$140 million, to bring the system into environmental compliance. As
the system’s owner, Pennsylvania American Water will continue the
projects started by the SSA and assume the SSA’s obligations under
the Consent Decree.
As part of the PUC’s approval of the purchase, Pennsylvania
American Water agreed to adopt the existing wastewater rates for
customers served by the SSA system, although such rates will now be
billed on a monthly rather than bi-monthly basis. 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.
"Our employees have been providing water service for a long time
for the Scranton and Dunmore communities, and we are very pleased
to now be the wastewater provider as well,” said Pape. “We are also
excited to welcome the SSA employees to the Pennsylvania American
Water team.”
All of the approximately 80 SSA workers who operate the
wastewater system have been offered employment. The employees are
represented by the Teamsters Union, Local 229, who voted on Dec. 2,
to ratify a new contract offered by Pennsylvania American Water.
The employees gain immediate access to the training, development
and career opportunities in any of the operations of Pennsylvania
American Water or its parent company.
Pennsylvania American Water’s purchase of the sewer system
enables SSA to pay off its existing debt.
Under the purchase agreement, Pennsylvania American Water also
committed to bring 100 new jobs to Scranton by 2020. "As we
continue to invest in the region and expand our operations, these
will be important jobs to support not only Pennsylvania but the
growth of our national footprint," said American Water Chief
Operating Officer Walter Lynch. “We expect the new jobs to generate
a very positive economic impact for the Greater Scranton Area."
This acquisition adds to the company’s series of large municipal
wastewater transactions. In December 2015, Pennsylvania American
Water acquired the wastewater assets of Fairview Township, York
County. On October 31, 2016, the company purchased the wastewater
assets of the Borough of New Cumberland in Cumberland County. In
September 2016, Pennsylvania American Water executed an agreement
to acquire the wastewater system assets of the Municipal Authority
of the City of McKeesport, Allegheny County, which is currently
pending regulatory approvals. Pennsylvania American Water now
operates wastewater systems in Adams, Beaver, Butler, Chester,
Clarion, Cumberland, Lackawanna, Monroe, Northumberland, Pike,
Washington and York counties.
Pennsylvania American Water, a wholly owned subsidiary of
American Water (NYSE: AWK), is the largest 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.
Cautionary Statement Concerning Forward-Looking
Statements
Certain statements in this press release are forward-looking
statements within the meaning of the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. Forward-looking
statements relate to, among other things, anticipated capital
investments, the ability of Pennsylvania American Water to comply
with the Consent Decree, and the ability to achieve certain
benefits, synergies and goals relating to the transaction and the
acquired operations. These statements are based on the current
expectations of management of Pennsylvania American Water. There
are a number of risks and uncertainties that could cause actual
results to differ materially from these forward-looking statements,
including with respect to (1) the occurrence of the benefits and
synergies expected or predicted to occur as a result of the
acquisition; (2) unexpected costs, liabilities or delays associated
with the integration of the acquired business; (3) regulatory,
legislative, local or municipal actions affecting the water and
wastewater industries, which could adversely affect Pennsylvania
American Water; (4) Pennsylvania American Water’s ongoing
compliance with the Consent Decree; and (5) other economic,
business and other factors. Forward-looking statements are not
guarantees or assurances of future performance or results, and
Pennsylvania American Water and its affiliates do not undertake any
duty to update any forward-looking statement.
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version on businesswire.com: http://www.businesswire.com/news/home/20161229005256/en/
Pennsylvania American WaterSusan Turcmanovich,
570-351-0120Pager: 888-441-2138susan.turcmanovich@amwater.com
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