Pennsylvania American Water, a subsidiary of American Water, announced that it has signed an agreement to purchase the wastewater system assets of Upper Pottsgrove Township in Montgomery County for $13.75 million. The Township’s wastewater system serves nearly 1,600 customers.
“As the water provider for the neighboring Glen Alsace and Royersford areas, we are well positioned to serve Upper Pottsgrove Township through experienced, professional employees that can leverage the resources of our other local operations,” said Pennsylvania American Water President Mike Doran. “In fact, some of our employees live in the Upper Pottsgrove area, so this acquisition is a natural fit, and we are glad to welcome Upper Pottsgrove to the Pennsylvania American Water family.”
The agreement was approved by the Upper Pottsgrove Township Board of Commissioners on April 20. Township officials acknowledged that the age and maintenance needs of the system would otherwise lead to significantly higher sewer rates. During public meetings, Township officials cited retiring debt, replenishing unfunded pension liabilities, and providing funding for other Township infrastructure needs as reasons for the sale.
Pennsylvania American Water plans to make necessary wastewater infrastructure upgrades to improve and sustain the reliability and compliance of the system. The company will also assume three public sewer service extension projects under the Township’s current Act 537 plan.
Pennsylvania American Water will seek approval of the acquisition from the Pennsylvania Public Utility Commission (PUC) and other necessary approvals from the Pennsylvania Department of Environmental Protection. The company expects to close the transaction in the first half of 2021, pending regulatory approvals.
The purchase agreement between Pennsylvania American and the Township was executed under Act 12, which allows municipalities to sell their water and wastewater systems for a price based on the fair market value of the facilities. Enacted in 2016, this statute gives municipalities the opportunity to receive a purchase price that is more reflective of the current value of their system assets.
In 2019, Pennsylvania American Water acquired the wastewater and/or water assets of Exeter Township, Berks County; Steelton Borough Authority, Dauphin County; Sadsbury Township, Chester County and the Borough of Turbotville, Northumberland County, adding over 12,000 new wastewater and water customers to the company’s customer base. The company also recently signed purchase agreements with Royersford Borough, Montgomery County (1,600 wastewater customers), Valley Township, Chester County (1,700 water and 3,100 wastewater customers) and the Borough of Kane Authority, McKean County (2,100 wastewater customers).