Here are some background articles on the CWA sale.
From The Inquirer, 4/12/22:
The Pennsylvania Supreme Court on Monday agreed to hear CWA’s appeal of a lower-court ruling that would allow the financially strapped City of Chester to sell the sprawling water system that serves 49,000 customers in 33 towns in Delaware and Chester Counties. The sale would get the city out of hock.
The Commonwealth Court ruled in September that Chester, as the founder of the water system in 1939, was CWA’s sole owner and can entertain sale offers for the utility, despite objections from suburban interests that represent the vast majority of its customers.
CWA says the authority, where six of the nine members are appointed by Delaware and Chester Counties, controls the assets and does not want to sell. CWA says suburban customers’ water rates would rise significantly under private ownership, while the benefits of the system’s sale would flow mostly to the city.
The Supreme Court’s decision will sort out whether an authority’s board, or the founding municipality, controls its assets.
CWA, as a counterproposal, in 2019 offered to give the City of Chester $60.2 million to pay down the city’s obligations in exchange for a 40-year-agreement by the city to drop efforts to sell the water authority. CWA said the payment would result in a smaller rate increase than if the authority was sold to a private company. Aqua moved to block that agreement, and the matter is in litigation.
The CWA sale is among the largest proposed transactions in a frenzy of water and wastewater system privatizations in Pennsylvania. Those sales are being driven by a 2016 state law that encourages the consolidation of smaller systems under private ownership.
The law, called Act 12, allows investor-owned utilities to pay an appraised fair-market value for an acquired system, rather than its lower depreciated cost or “book value,” resulting in very attractive revenue opportunities for municipalities looking to avoid tax increases. Critics worry that the high prices utilities are paying for the systems will boost water and sewer rates for existing and newly acquired customers for decades to come.
From Bloomberg news 12/22/22:
In 2017, Aqua made an unsolicited $320 million offer to Chester Water Authority — a practice that Essential Utilities Chairman and Chief Executive Officer Chris Franklin said in an interview is commonplace at the company. The water authority rejected it. Chester City Council in 2019 then issued a request for proposals, which Aqua won.
Since then, the issue of who owns and has the rights to sell the water authority has moved through the courts. In September 2021, the Commonwealth Court ruled that the city of Chester is the sole owner of the water authority. Following that decision, Chester City Council unanimously voted to approve a $410 million agreement with Aqua, while the Chester Water Authority appealed the decision to the state Supreme Court, which was supposed to hear the case on Nov. 30.
The city’s November federal bankruptcy filing paused that litigation. After the Dec. 15 hearing where Walrath was appointed, the next steps involve mediation.