Showers, toilet flushing optional as residents tackle high water bills

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(The Center Square) - Retired draftsman and designer Dennis Till has exercised complete control over the look inside his suburban home just east of Reading - planning upgrades and renovations himself - but he has been unable to control the cost of a vital element that comes into the home.

Water.

Till recently paid $174.68 for a single month of water-sewer service for himself.

"I don't sprinkle water; I don't wash my car; nothing," he said.

Neighbor Greg O'Brien, with three people in his home, has seen bills more than double to $250 to $275 a month. Elsewhere in Exeter Township, Berks County, some people, according to a local Pennsylvania lawmaker, are sticking to two showers a week or limiting toilet flushes.

"They are literally driving people out of this community," said Republican Rep. Mark Gillen. "People are saying, 'We just cannot afford $3,600 a year for water and sewer.'"

The problem-plagued Exeter system was public until it was bought in 2019 by Pennsylvania American Water, a subsidiary of New York Stock Exchange-listed American Water Works. Now the township is just one of many pockets in Pennsylvania - and the nation - where water bills have surged after such a takeover.

Often, the transaction happens after a change in state law to facilitate purchases of troubled systems. Pennsylvania enacted such a change in 2016.

David Springe, executive director of the National Association of State Utility Consumer Advocates, said multiple states have created "a legislative framework" for troubled systems to be purchased - and then seen eye-catching price run-ups for customers when the takeovers happen. It is a complex, many-sided problem, he and other observers said.

Municipalities frequently were undercharging customers. They often had not invested in needed upgrades.

Beyond that, elected municipal leaders may shy away from raising rates for fear of losing elections, according to Jenn Kocher, spokesperson for the National Association of Water Companies. And, she said, public municipal water and wastewater systems often do not invest in improvements like private ones do.

"A 2023 study found that Pennsylvania regulated, private water companies are 10 to 100 times less likely to have a water quality violation than other system owners like local governments," Kocher said.

A spokesperson for Pennsylvania American Water, Gary Lobaugh, said that when it took over the Exeter system in 2019, it had "failing equipment, repeated overflows, and pollution." The lack of upgrades had led to a four-million-gallon sewage spill into the Schuylkill River, he said, and a government consent order for upgrades was in place.

Overall, the company has made or intends to make improvements worth more than $75 million, he said.

Pennsylvania's Act 12 of 2016 changed the Public Utility Code to allow a new way of setting the "fair market value" for water or wastewater systems. The change let the sale price reflect not just the physical parts, but the system's worth to the community.

The result was system sales occurring at much higher prices.

"To be clear, I think the Legislature at the time was well-intended," said Pennsylvania Consumer Advocate Darryl Lawrence. Lawmakers, he said, didn't envision what would happen when "large, for-profit water companies" started buying smaller systems.

Last week, a bill intended to lead to a fix advanced in the state House.

Sponsored by Democratic Rep. Danilo Burgos of Philadelphia, the measure would put a one-year moratorium on takeovers. It would also create a "Water Utility Reform Working Group" to come up with a new policy within 10 months.

"The one-year approach helps us come up with a better solution," Burgos said.

The bill cleared the House Consumer Protection, Technology & Utilities Committee with support from all Democrats and Republican Rep. Craig Williams of Delaware County. It is awaiting action by the Appropriations Committee.

It's not the first attempt to straighten things out. Democratic Sen. Judy Schwank of Berks County, whose district includes Exeter Township, said multiple earlier bills have received no action at all. She sponsored one that would require a binding ratepayer referendum on the system sales.

The problem of runaway water bills "is actually getting worse," Schwank said.

What is different now is that the word "affordability" is all the rage among politicians.

In Scranton, where Pennsylvania American Water purchased wastewater system assets in 2016 for $195 million from the local authority, it was "a good deal at the time," according to Democratic Rep. Jim Haddock. He added, "It was well known that the system needed help and the city needed help."

But the price increases for customers have far outstripped wage increases, he said.

He supports the Burgos bill. So does Lawrence, the consumer advocate for the state, who described its potential effect as "press the pause button." A spokesperson for Gov. Josh Shapiro said his office is monitoring the Burgos bill.

Pennsylvania American Water dislikes the bill, according to Lobaugh.

"Repealing this framework and imposing a blanket moratorium would remove a regulated solution, limit local decision‑making, and create uncertainty," he said.

A comprehensive study of the problem will be challenging.

Part of the problem nationally is that "fair market value"-type valuations are being used to buy both distressed systems and those with no problems at all, according to  Karen Stachowski, who heads the water committee for the National Association of State Utility Consumer Advocates.

Stachowski, who also is a deputy attorney general in Tennessee, said a state's utility commission may allow a buyer to recoup from ratepayers both the "acquisition premium" - the amount the purchase price exceeded book value - and capital improvement investments into the system.

"I think the issue is not all commissions consider the rate impact of the acquisition at the time of the acquisition," she said.

Exeter resident Dave Hitesman works as a shift supervisor at a wastewater plant in another municipality. A sale to a private entity, he said, takes money out of a locale and sends it elsewhere. Nonetheless, many municipalities are doing it.

"The deed is kind of done," Hitesman said of Exeter. "The township doesn't own it anymore. If anything, the local areas can use it as learning, to know that they should keep their assets."