Towamencin Township Municipal Center. Photo by James Short.
Towamencin Township’s sanitary sewer sale saga is coming to an end after nearly four years – without an asset purchase agreement or privatization.
In surprising news that received a loud applause from those who have been opposed to the sewer sale from day one, township Supervisors Chairman Chuck Wilson announced Wednesday night, that in the wake of a recent PUC ruling, the termination of the asset purchase agreement with PA American Water will be on the agenda for the next meeting.
“It is very unlikely the PUC would ultimately approve the sale,” Wilson said. “I am asking an item be placed on the agenda for our next meeting to terminate the asset purchase agreement.”
According to The Reporter, Wilson said the change in law has prompted the termination of the agreement, after talking with Pa American Water Company and township counsel.
Per The Reporter, at the start of Wednesday night's meeting, Wilson read a statement outlining the reasons for the sudden about-face.
"Since our last meeting, the Pennsylvania Public Utility Commission issued an order, setting a formula that effectively determines what it deems to be a reasonable purchase price for a wastewater system in a sale to a public utility," Wilson said.
"The purchase price PA American Water must pay to the township under the asset purchase agreement is far higher than the PUC's purchase price standard under its new formula," he said. "Although the PUC did recently conditionally accept PA American's application to purchase our system, given the new legal framework instituted by the PUC, it is very unlikely the PUC would ultimately approve the sale of the system, to PA American Water, as currently structured."
Per The Reporter:
Sale of the township’s sewer system has consumed public meetings since late 2020, leading up to a board vote to sell in May 2022 for a roughly $115 million purchase price. That sale then underwent a transfer of the asset purchase agreement to a second buyer after the first pulled out. Objections to the sale led residents to pass a home rule charter in 2023 that they argue makes the sale illegal.
Meanwhile, members of the “Towamencin NOPE” group that coordinated sale opponents filed suit against the board, and argued that the purchase price would harm residents via steep hikes in sewer rates under a private owner. The supervisors who backed the sale argued that the sale proceeds could be used to pay down debt, address upgrades needed at the plant due to regulations, and lower taxes and generate revenue to tackle infrastructure and other projects across the township.
PA American Water released the following statement on its website:
Pennsylvania American Water (PAW) and Towamencin Township will begin the process of terminating the sale of the township’s wastewater system, subject to formal approval at Towamencin’s next Board of Supervisors’ meeting. On June 14, 2022, Towamencin executed an asset purchase agreement (APA) to sell the township’s wastewater system to NextEra Water Pennsylvania, LLC (NextEra Water). In March 2023, NextEra Water exited the transaction and Pennsylvania American Water agreed to step in as the buyer under essentially the same terms agreed to by NextEra Water. PAW acquired the rights to the APA effective March 24, 2023.
On July 2, 2024, the Pennsylvania Public Utility Commission (PUC) finalized new criteria for reviewing the sale of public water and wastewater systems. The terms of the APA initially agreed to by Towamencin Township and NextEra Water, and now reflected in the APA to which PAW is a party, are substantially different from the PUC’s new criteria. Given that, at this time, PAW and Towamencin will begin the process of termination of the existing APA.
“We are grateful to the Board of Supervisors for their partnership and the trust they placed in us to address their environmental compliance challenges and much needed investment in their treatment plant,” said Pennsylvania American Water President Justin Ladner. “Unfortunately, and upon further review, we both agree the structure of the original deal is unlikely to meet the approval criteria recently established by the PUC. Pennsylvania American Water has a long history of delivering water and wastewater solutions that bring greater value to communities, and we will continue to take that same approach across the Commonwealth.”
Notably, next month, Pennsylvania American Water will seek PUC approval of its proposed acquisition of the Elizabeth Borough Municipal Authority, a wastewater system in Allegheny County.
“Upon review and approval by the PUC, we look forward to serving new customers in Elizabeth Borough,” Ladner said
The sewer sale has been a contentious topic – and the impetus for outspoken anti-sale supporter Supervisor Kofi Osei to run successfully last year for election to the Board of Supervisors – since the topic was broached in 2020.
In May 2023, voters were successful in passing a Home Rule Charter for Towamencin, which forbade the privatization of the sewer system. However, a majority of supervisors and PA American Water intended to proceed with the sale regardless.
Osei, a former Government Commission Study member, along with resident and fellow member Jenn Foster, filed a civil suit against the supervisors in Montgomery County Common Pleas Court on Aug. 22, 2023.
On Wednesday night, Osei told North Penn Now the reason to terminate the sale was in regards to the recent legal environment at PUC leaning toward denying the sale.
“We have an emergency repair for the Fischer’s Park interceptor and then, of course, we will have to deal with the standard maintenance,” Osei said in response to what comes next after termination of the sale.
Osei told The Reporter post-meeting, "This is Towamencin's win. Thank you all for never giving up. Hope to see a lot of you on the 11th."
Foster told The Reporter after the meeting, "We'll have more to say about this in the coming days, but we did it."
According to the township, on Sept. 3, 2020, representatives of Public Financial Management attended the township Sewer Committee’s meeting to review the process of evaluating the sewer system and whether monetization is a worthwhile option. Twenty days later, supervisors accepted PFM’s proposal to perform a sanitary sewer analysis and valuation for $9,500. In January 2021, PFM presented the analysis and valuation report to supervisors.
Last March, in a historic 4-1 vote, supervisors agreed to a PA American Water as the new sanitary sewer system buyer, at an $11 million loss from the original $115 million offered by NextEra Energy, according to The Reporter.
“The assignment agreement will assign NextEra’s interests in the asset purchase agreement to PA American,” said Wilson last March. “This assignment, if approved, merely allows PA American to step into the shoes of NextEra, under the APA as amended. The result of this assignment is not changing the outcome that was presented publicly last year.”
The vote came two weeks after a surprise agenda item where supervisors announced that NextEra backed out of the deal. Read more on that meeting here.
Residents against the sale made it known since the early town hall meetings that they did not private ownership and rate hikes just for NextEra to recoup its purchase price and believed the sewer system is not in dire straits. Meanwhile, supervisors saw the $115 million was an opportunity to eliminate debt and fund many capital projects, among other wants.
