HERSHEY, PA, OCTOBER 31, 2016 -- Pennsylvania American Water, a subsidiary of American Water, announced today that it has acquired the wastewater system assets of the Borough of New Cumberland in Cumberland County. The purchase price is approximately $23 million.
The newly acquired system provides wastewater service to approximately 3,100 customers. Pennsylvania American Water already provides water service for the Borough’s residents and businesses.
"We are very pleased to close another significant acquisition that further expands our wastewater footprint," said Pennsylvania American Water President, Kathy L. Pape. "The purchase not only provides long-term wastewater solutions and financial benefits for the local community, but it also aligns perfectly with our existing water service territory."
In addition, Pape said four Borough employees who operate the wastewater system have been offered employment with Pennsylvania American Water.
"Thanks to this transaction, all of the Borough's outstanding debt, currently $16 million, will be eliminated by retiring the general obligation bonds," said New Cumberland Borough Council President Jack Murray. "The Borough not only receives 100 percent of the net sale proceeds, but we will also be relieved of all future wastewater treatment costs and capital investments to comply with increasing government mandates."
As approved last week by the Pennsylvania Public Utility Commission (PUC), the company has adopted the Borough’s existing wastewater rates for customers served by the Borough’s system, although such rates will now be billed on a monthly rather than quarterly basis. The company’s wastewater tariff on file with the PUC will apply with respect to all other rates of service, as well as all rules and regulations of service.
Additionally, the company agreed that no rate changes may be proposed by the company to take effect on customers’ bills prior to January 1, 2018. The PUC regulates the company’s rates, rules and regulations of service; so any future rate change will need to be reviewed and approved by the PUC.
Pennsylvania American Water also committed to invest $2 million in wastewater and/or water improvements within New Cumberland over the next five years. The company will partner with Borough officials to identify areas where aging wastewater and water facilities can be replaced in conjunction with street and sidewalk improvements.
This acquisition is the company's latest in a string of larger municipal wastewater acquisitions. On December 22, 2015, Pennsylvania American Water acquired the wastewater assets of Fairview Township, York County. The company also signed agreements earlier this year to acquire the wastewater assets of the Scranton Sewer Authority and the Municipal Authority of the City of McKeesport, both of which are pending regulatory approvals. Pennsylvania American Water currently operates wastewater systems in Adams, Beaver, Butler, Chester, Clarion, Cumberland, Monroe, Northumberland, Pike, Washington and York counties.
Pennsylvania American Water, a subsidiary of American Water, is the largest investor-owned water utility in Pennsylvania, providing high-quality and reliable water and/or wastewater services to approximately 2.3 million people. Founded in 1886, American Water is the largest publicly traded U.S. water and wastewater utility company. Marking its 130th anniversary this year, the company employs more than 6,700 dedicated professionals who provide regulated and market-based drinking water, wastewater and other related services to an estimated 15 million people in 47 states and Ontario, Canada. More information can be found at www.amwater.com.
