As many of you are aware, I have been closely following the potential sale of the Towamencin sewer system. I’m not surprised by the 4-1 vote to sell, but given our sewer system’s priors, I am surprised by both the stated reasons to sell and the chosen bidder. Here is a timeline with some commentary of significant events related to the sewer sale.
2008 - Last time Towamencin raised sewer rates for all residential ratepayers before this year.
2011- Study was done by Hazen and Sawyer that suggested that then UGTMA needed to raise rates to handle upcoming permit cycles. This study is cited on the sewer valuation website as the primary reason we started this exploration.
2015 - Upper Gwynedd and Towamencin split UGTMA and Towamencin remained as the sole incorporating municipality of what is now TMA. Upper Gwynedd began the process of redirecting ratepayers in their township to their own plant.
2016 - Act 12 is passed, allowing for water and wastewater systems to be sold at "Fair Market Valuation” as opposed to depreciated cost.
2017 - Towamencin flirts with hiring PFM to evaluate monetizing the sewer system. (This was found using the Right to Know Law, no link.)
2018 - A depreciation study was done of the sewer system and its depreciated value was $23.5 million
2020 - Towamencin formally begins exploring the option to monetize the sewer system citing "initial concerns whether the existing system would be able to meet future permit limit requirements without significant capital expenditures”
2021 - I was and am of the opinion that the 2011, 2015, 2018, and 2020 events should have resulted in rate hikes so I brought it up in
public comment on Oct 13. Towamencin Board of Supervisors Chairman Chuck Wilson responded, "And to your comment about not doing financial planning, when we made the agreement with Upper Gwynedd we knew exactly where our rates would be.... I would rather have money in the hands of our taxpayers and ratepayers than in our pockets.”
To my ears, that response from Chuck said loud and clear that we weren’t going to get another sharp rate hike and that Towamencin is capable of planning for the future. It also said that saving taxpayers and ratepayers money was a high priority in this decision.
2022 - Towamencin receives bids and some analysis is presented. Despite a huge amount of opposition at public meetings over the course of 2 months, the
Towamencin Board of Supervisors voted to sell to NextEra 4-1.
There are a few problems with the presented analysis. The TMA rate projection from PFM starts with a 26% hike and keeps parity with the investor-owned utilities for almost the entirety of the 10-year period despite not having to pay shareholders or taxes. First, that 26% is a betrayal of Chuck’s response to me before and counter to all available data on rate comparisons between investor-owned utilities and municipal authorities. There is no way we can simultaneously plan for the future but also need a 20% rate hike followed by a 26% rate hike for very predictable events. Either PFM’s rate projection is bogus or we don’t want $115 million anywhere near supervisors who don’t plan for the future.
Second, highest bidder is a very poor criteria for this type of transaction because the Board of Supervisors’ stated goal was "total financial impact” to both the taxpayer and ratepayer and about 1/5th of ratepayers by cash flow are situated outside of the township. By the presented numbers, both PA American Water Company and Franconia Sewer Authority were better deals to taxpayers and ratepayers than NextEra. I’m not one to trust PAWC’s submitted projection because they just got a rate hike that
puts their rates higher than their projection but multiple of our neighbors have questioned why the FSA-projected rates were so much lower than TMA’s. If FSA were to acquire our system, they would run it under the exact same circumstances under the municipal authorities act. What can Franconia do that Towamencin apparently can’t? Not presenting any analysis of the PAWC and FSA bids was a huge disservice to Towamencin residents.
I haven’t scrutinized the township projections in the same way but if we can’t trust the sewer rate projections for a sewer sale, there is no chance NextEra can solve tax problems too. The PUC has a formula. At some point in the next decade, Next Era will be entitled to recover $8-10 million a year above what it takes to run and upgrade the sewer system. Our current sewer revenue is about $5 million a year, NextEra could very realistically triple the rates with the PUC’s grace. Millions of Towamencin dollars would be leaking out of the local community forever. More than what we would receive on interest on the proceeds of privatization. There are no good reasons to justify privatizing our sewer system, especially with the nature of 2016’s Act 12.
NextEra Energy is not currently PUC approved to operate wastewater, which makes it an odd choice with how urgent the presented problems seem to be. That also means we have time to stop the sale. We might be able to stop this by making sewer privatization illegal in Towamencin through Home Rule, which would require 2 petition periods and 2 ballot initiatives. We are having a Towamencin charter convention and petition signing event on June 25th at the Fischer’s Park Carriage Home Pavilion. Petition signing will start at 4:00 p.m., speakers will start at 6:00 p.m..
Neighbors Opposing Privatization Efforts have stopped the sale of municipal sewer systems in Norristown and Conshohocken. You can read about the stories at
https://www.stopthesewersale.com/. If you want to join the discussion about stopping Towamencin’s potential sale, you can join
https://www.facebook.com/groups/tnope or email
[email protected].
See also:
Editorial: Why We Decided to Sell Our Sewer System 
