A local utility director has gone viral for his testimony in Harrisburg about one of the state’s hottest topics.
Tony Bellitto, executive director of the North Penn Water Authority, has now been viewed over 5 million times in a clip posted online of his testimony in a Harrisburg hearing earlier this month.
"People should see privatization for what it really is, which is a scam,” he said.
"It is a loan, disguised as a gift, wrapped up with empty promises, that must be paid back with interest, through exorbitant rate increases resulting in no better service to the customers, while the private company’s upper management and investors fill their own pockets with obscene amounts of profits. And they laugh all the way to the bank,” said Bellitto.
Private ownership of public utilities has been a hot topic throughout the North Penn region, with Towamencin nearing the end of their third year debating the potential sale of that township’s municipal sewer system, and a leading opponent of that sale poised to take a seat on that municipality’s board of supervisors next month after a tightly contested election. Other municipalities in the North Penn area have referenced that sale and the ongoing debate, while privatization opponents in Towamencin and across the county have pushed for changes to Act 12, the state law passed in 2016 that allows private companies to buy public water and sewer systems.
Bellitto has long been a local expert, leading the North Penn Water Authority for two-plus decades through near-constant pipeline repairs, new water towers, hydrant flushing, and public-friendly events like hydrant decorating contests and toy drives each year, while receiving awards from regional and national industry associations for his expertise.
The now-viral video comes from Bellitto’s testimony in Harrisburg on Dec. 12 to the state House of Representatives’ Consumer Protection, Technology and Utilities Committee to support the amendment of Act 12 and reiterate the benefits of keeping authorities publicly owned. Bellitto’s testimony starts at roughly 24 minutes into an 88-minute video posted by the state house legislature, runs for roughly nine minutes, and speaks on behalf of the Pennsylvania Municipal Authorities Association representing hundreds of similar authorities across the state.
"Authorities provide an excellent value to consumers: excellent service, low cost, high value. And it’s the consumers that I believe we need to be focused on,” he said.
"Act 12, in contrast, is a bum deal for the consumers, and it’s actually a great deal and a windfall for upper management in investor-owned utilities, and their shareholders,” Bellitto said.
He then described how municipalities have competing interests, such as maintaining roads, parks, and public works services via revenues such as local taxes, as compared to authorities which focus only on water or sewer service, are staffed by licensed professionals, and are funded by user charges. Investor-owned utilities have been shown to cost double or triple the cost to consumers that public authorities do, he added, before drawing a distinction between rates per gallon and total costs that include distribution charges the private firms can add.
"The big private water utilities like Aqua and Pennsylvania American certainly know that they are the higher-cost alternative, so they don’t even try to argue the point. Instead, they put their own misleading spin — and it is spin — on this, by claiming that publicly-owned systems have rates that are artificially low, because they are falling apart and not investing in the necessary improvements to their system infrastructure,” he said.
"They claim that the lower rates put the public at risk of receiving poor water quality and unreliable service and that only the privatization of those public systems will provide the necessary capital funding for infrastructure improvements. However, it is important to note that this is a false narrative, and nobody should be fooled by such misinformation,” Bellitto said.
Both public and private systems must meet standards set by the state and federal government regarding water quality, pressure, discharge limits, and environmental protection, and if those standards aren’t met the system could receive violation notices and/or issue warnings to customers. How often does that happen? Bellitto told the committee that the recent privatization efforts are aimed at acquiring "large, well-managed and financially stable” municipal systems that "have a track record of excellent, high-quality, reliable service.”
"The private utilities are not as bulletproof as they claim to be, and the municipal systems are not as poorly operated as they assert,” he said, before listing three reasons why the private utilities tend to charge much more than the publicly-owned ones.
"First, it’s because their costs are spread over a very wide customer base, so customers living in one geographic region have to contribute to paying for infrastructure improvements in other distant areas, in which they receive no benefit. They call that ‘economies of scale,’ but that’s just a nice term for meaning that we have to pay for a system that we don’t get any benefit from,” he said.
"Second, it’s because the for-profit business model requires that the company pay a dividend to their shareholders; municipal authorities have no such obligation. And third, they pay exorbitantly high salaries, bonuses and stock options to their upper management, when compared to the more modest financial compensation received by employees of publicly-owned systems, in the order of millions of dollars. Someone has to pay for that,” he said.
His closing statement, listing those three reasons and calling privatization a scam, caught fire online: a clip posted by nonprofit @MorePerfectUS on X, the social media platform formerly known as Twitter, had garnered 5.1 million views in the week since it was posted, with over 23,000 likes, over 6,000 reposts and over 1,400 bookmarks of the video. That same clip drew praise from members of the "Towamencin NOPE” group opposing that local sale, with NOPE founder Kofi Osei calling it "excellent testimony on the harms of privatization,” and other NOPE members saying the video should be sent to the supervisors who approved that sale. During Towamencin’s supervisors meeting the next night, NOPE member Tina Gallagher encouraged the supervisors to watch the video, and said the quotes from Bellitto "really stood out to me.”
"When your sewer and water rates become as high or higher than your electric rates, you are putting people in harm’s way. So let’s put an end to this scam, as Mr. Bellitto calls it, and move on,” she said.
How does the utility director view the current law?
"Act 12 has been called a fair market value. There’s nothing fair about it. It’s actually predatory pricing. It’s an odd situation where both the buyer and the seller have an incentive for the price to be as high as possible because they’re going to get that back in full, with interest as well,” Bellitto said.
Outside firms hire consultants to appraise a system’s infrastructure, but those firms have little interest in the infrastructure itself, he said.
"What they’re buying is the customers, which is a long term, forever revenue stream. To argue about whether a pump is worth, whatever, or if it’s been depreciated, it’s the continuous stream of customers they’re actually purchasing. That has the value. One way to put it is they’re purchasing not the eggs, but the goose that lays the golden eggs. They’re purchasing that customer base, that’s what they’re buying.”
What would Bellitto change? "Act 12 should be modified by adding a voter referendum so that the rate paying customers have the opportunity to voice whether or not they are in favor of privatization, and number two: the scope should be addressed, to deal with only distressed systems which are financially troubled and which are operationally deficient. And those are criteria that can actually be quantified.”
For more on the North Penn Water Authority visit www.npwa.org or follow "North Penn Water Authority” on Facebook.
This article appears courtesy of a content share agreement between North Penn Now and The Reporter. To read more stories like this, visit www.thereporteronline.com.
