Pennsylvania American Water Closes Acquisition of McKeesport Wastewater System
December 18 2017 - 1:51PM
Business Wire
First transaction completed under
commonwealth’s Fair Market Value legislation
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 Municipal
Authority of the City of McKeesport (MACM). The purchase price is
approximately $159 million.
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Signing the acquisition closing documents
are (l-r) Pennsylvania American Water President Jeffrey McIntyre,
McKeesport Mayor Michael Cherepko, and MACM Chairman Dale McCall.
(Photo: Business Wire)
The transaction marks the first acquisition completed under
Pennsylvania’s Act 12 of 2016, which allows municipalities to sell
water and wastewater systems for a price based on the fair market
value of the system.
“As the first finalized sale under Pennsylvania’s Fair Market
Value legislation, this acquisition establishes a strong example
for other communities to consider,” said Pennsylvania American
Water President Jeffrey McIntyre. “Prior to the passage of Act 12,
the depreciated cost of this system might have prevented the City
of McKeesport from the opportunity for financial stability.”
The MACM wastewater system provides service to approximately
22,000 customers, including those served under bulk contracts, in
13 municipalities in Allegheny County.
“The crux of this transaction is bringing financial stability to
the City of McKeesport and saving our taxpayers from Act 47
municipal bankruptcy,” Mayor Michael Cherepko said. “When we think
about it, the privatization of local sewage services truly makes
sense. The City isn’t involved in other utility businesses – gas,
electric, water – and this is a final step in providing consistent,
regulated utility services to our community.”
The transaction’s closing follows a regulatory review and
approval process by the U.S. Environmental Protection Agency (EPA),
Pennsylvania Department of Environmental Protection (DEP), the
Pennsylvania Public Utility Commission (PUC) and Allegheny County
Health Department.
The PUC recognized Pennsylvania American Water’s ability to
provide much needed investment in the system, enhanced customer
service and assistance program for low-income customers when the
commission approved the acquisition on October 26, 2017.
McIntyre added that long-term rate stability is one of the most
important benefits for these wastewater customers. Under the
purchase agreement, Pennsylvania American Water will not increase
base wastewater rates any earlier than one calendar year after the
closing. The company’s rates are regulated by the PUC and any
future rate changes would have to be reviewed and approved by the
PUC.
He also pointed out that low-income wastewater customers in
McKeesport are eligible to apply for assistance through
Pennsylvania American Water’s H2O Help to Others Program, which
offers grants and discounts on bills for those customers who
qualify.
All MACM workers who operate the wastewater system have been
offered employment, subject to standard pre-employment screening.
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.
This acquisition adds to the company’s series of municipal
wastewater transactions. In 2016, Pennsylvania American Water
acquired the wastewater assets of the Scranton Sewer
Authority in Lackawanna County and the Borough of New
Cumberland in Cumberland County.
Pennsylvania American Water now operates wastewater systems in
Adams, Allegheny, Beaver, Chester, Clarion, Cumberland, Lackawanna,
Monroe, Northumberland, Pike, Washington and York counties.
Pennsylvania American Water, a subsidiary of American Water
(NYSE: AWK), is the largest water utility in the state, 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.
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version on businesswire.com: http://www.businesswire.com/news/home/20171218006003/en/
Pennsylvania American WaterGary LobaughT: 724-873-3674M:
724-944-5148Gary.lobaugh@amwater.com
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