Pennsylvania American Water, a subsidiary of American Water, announced today that it has signed an asset purchase agreement to acquire the McKeesport wastewater system. The agreement signing follows recent votes by the McKeesport City Council and the Municipal Authority of the City of McKeesport (MACM) in favor of Pennsylvania American Water purchasing the wastewater assets.
“I firmly believe this transaction is being made in the best interest of the wastewater customers served by this system now and in the future,” Mayor Michael Cherepko said. “It became very clear to this administration that the only way to save our community from municipal bankruptcy, while continuing to offer the same level of services our residents deserve, would be to transfer our local sewage system to a regional or national utility company. This transaction will balance the city’s current financial problems, allow this administration to safeguard the city’s future and ensure reliable wastewater service for 22,000 customers.”
The total value of the transaction is approximately $156 million, subject to certain adjustments provided in the agreement. The McKeesport wastewater system serves approximately 22,000 customers.
"Our company and our employees have been providing water service in the Mon Valley for decades, and we are excited for the opportunity to be the future wastewater provider to the residents of McKeesport, Dravosburg, Duquesne and Port Vue,” said Pennsylvania American Water President Kathy L. Pape. “We look forward to closing the proposed acquisition and to providing wastewater services that reflect our commitment to environmental stewardship and quality customer service.”
Pennsylvania American Water and the City of McKeesport will seek approval of the acquisition from the Pennsylvania Public Utility Commission (PUC) and other necessary approvals, such as the Pennsylvania Department of Environmental Protection. The MACM initially issued a request for bids in June 2016 for the potential acquisition of its wastewater system.
Pape said long-term rate stability is one of the most important benefits for 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. Pennsylvania American Water offers its low-income wastewater customers grants and discounted service to those who qualify through its H2O Help to Others Program.
Pape said upon closing the proposed acquisition that “we look forward to welcoming the MACM’s employees and customers to the Pennsylvania American Water family.” The company currently expects to close the transaction in the second half of 2017, pending regulatory approvals and the satisfaction of other closing conditions.