Our customers, employees, and communities that we serve are our number one priority.
PUC OKs Sale of BASA to PA
American Water Co.
$230 million acquisition promises transformational changes for communities
On Nov. 9, 2023, the Pennsylvania Public Utility Commission (PUC) voted to approve the $230 million sale agreement between the Butler Area Sewer Authority (BASA) to Pennsylvania American Water Company (PAWC), without modification. The vote comes more than a year after considerable community engagement and public dialogue that culminated in an agreement guaranteeing significant community benefits and ratepayer protections and the preservation of jobs and benefits for BASA employees. Both BASA and the water company will reach out to residents to provide details that explain the transition of services over the coming weeks, continuing a process that has been marked by transparency and openness from the outset.
To read the release detailing the vote and explaining all the elements included in the approved sale agreement, CLICK HERE.
Regulatory Process Update
On February 14, 2023, Pennsylvania American Water filed an application with the Pennsylvania Public Utility Commission (PUC) requesting approval to purchase BASA. That decision is pending.
Over the summer, the original $231.5 million sales agreement between BASA and PAWC was adjusted to $230 million as part of a joint settlement agreement after public hearings before a PUC administrative law judge. The hearings took place on two days in July and the settlement was announced in August.
As part of that agreement, the water company can recoup only $228 million through customer rates, meaning the overall cost to be recovered in future rates will be lower, ultimately benefiting customers.
That unanimous settlement agreement was reached between several key stakeholders, including BASA, PAWC, the Pennsylvania Office of Consumer Advocate, the Pennsylvania Office of Small Business Advocate, the PUC’s Bureau of Investigation and Enforcement, and Butler and Butler Township.
The sales agreement approved by the PUC includes several other important provisions.
-
As part of the agreement, PAWC will contribute $3.5 million, or $700,000 annually over five years, to the company’s statewide hardship grant program, which helps low-income families pay overdue water and wastewater bills in emergencies. The company also will increase eligibility for hardship grants from 200% to 250% of federal poverty income guidelines.
-
Customers also will enjoy a minimum one-year rate freeze from the closing date or Jan. 1, 2025, whichever is later. Following the rate freeze, the company will propose moving BASA customer wastewater rates to only 1.4 times the current system rate or PAWC’s proposed Rate Zone 1 system-average wastewater rates, whichever is lower. Any future proposed rate adjustments must undergo thorough governmental review and require PUC approval.
-
PAWC will assume responsibility for BASA’s ongoing capital cost projects, totaling over $75 million in critical infrastructure upgrades, and will prioritize local contractors for the work whenever possible. BASA’s $49 million debt will be eliminated entirely, using the proceeds from the sale.
-
BASA’s operation center will be maintained for a minimum of 10 years, and all current BASA employees, both union and non-union, will retain their jobs with existing salaries while continuing to have access to similar retirement and insurance benefits (retirees’ pensions will remain unaffected).
-
Finally, Pennsylvania American Water will petition the PUC to launch a pilot program aimed at replacing or repairing customers' laterals, potentially relieving individual customers of the burden of lateral repair costs, which can result in thousands of dollars in savings.
Our Commitment to the Community
The Butler Area Sewer Authority (BASA) has been providing wastewater services to several communities in our region for more than 70 years. Currently, we serve 14,655 customers over 32.5 square miles, including residents and places of business.
We have been presented with an offer from the Pennsylvania American Water Company to acquire our wastewater system. Before making any final decisions, we want to hear from local customers and get their thoughts and perspectives on this matter.
That is why we will be hosting a series of open houses, which will be held on September 27 and 29. These open houses will afford us the opportunity to hear directly from our customers and answer their questions. Our commitment to our customers, employees, and local communities remains steadfast. We know that this proposed acquisition will impact them, and they continue to remain our priority.
History of BASA
Under the Municipalities Authorities Act, the City of Butler and Butler Township incorporated the Butler Area Sewer Authority on November 3, 1962. The purpose of this authority was to serve both municipalities, connect the collection sewers, and enlarge and expand the sewage treatment plant.
While the City of Butler and Butler Township solely own BASA, the authority also provides services to six other municipalities including Center Township, East Butler Borough, parts of Connoquenessing Borough, Summit, and Oakland townships, and a small portion of Penn Township.
BASA began providing services to these municipalities at various points in time over the years. Specifically, Center Township, East Butler Borough, and Summit Township in 1974, Oakland Township in 1994, parts of Connoquenessing Borough in 1995, and Penn Township in 2003.
Information on Potential Acquisition
In December 2021, BASA’s board of directors entered into an exclusivity agreement with the Pennsylvania American Water Company (PAWC) to discuss a proposed acquisition of our wastewater system.
BASA had a fiduciary responsibility and economic obligation to the communities it serves to thoroughly assess its aging infrastructure, outstanding debt, and what future projects would need to be undertaken just to keep the facility operational.
During the early stages, it was important for BASA to deal with PAWC under a confidentiality agreement. This enabled BASA’s officials to determine what type of offer from PAWC would benefit the communities it serves. Specifically, two areas of focus for us have been the Capital Cost projects totaling $75 million that need to be completed and BASA’s $46.5 million in debt and other liabilities.
After months of ongoing discussions, public meetings, and customer letters, BASA's board of directors voted unanimously on Oct. 11, 2022, to sign an Asset Purchase Agreement (APA) with Pennsylvania American Water to acquire its wastewater system for $231.5 million. The City of Butler and Butler Township officials voted on individual resolutions regarding the sale. On Oct. 13, 2022, the City of Butler officials passed a resolution supporting the acquisition, and on Oct. 17, 2022, Butler Township commissioners also passed a resolution with four in favor and one abstention. However, the acquisition is still subject to approval by the Public Utility Commission, which is ongoing.
PAWC's Offer
According to the terms of the agreement, BASA’s $46.5 million in debt and other liabilities will be eliminated utilizing the proceeds of the sale. PAWC has guaranteed job security for all 34 BASA employees, and it will maintain the existing operations center for a minimum of 10 years. Additionally, PAWC will complete the list of Capital Cost projects, and carry out extensive and much-needed repairs to the facility.
Additionally, BASA customers are guaranteed a one-year rate freeze that would become effective on the anniversary of the sale or by Jan. 1, 2025. Currently, BASA can unilaterally raise rates at any time without needing approval from a governing agency. If PAWC wants to raise rates on customers, by law, it must petition the Public Utility Commission and obtain approval before it can do that. That process can take anywhere between six and nine months.
If the sale is approved by the PUC, the City of Butler and Butler Township—because they are the sole owners of BASA—will receive proceeds from the sale. While no final decisions have been made yet, a planning process is underway. Officials from the City of Butler and Butler Township would use proceeds obtained from the acquisition towards community projects that will benefit residents in the local area. Specifically, City of Butler and Butler Township officials want to hear directly from residents on what projects they would most benefit from.
Reasons Why We Are Reviewing This Offer
BASA has infrastructure challenges that will require considerable financial investment to maintain the current system for our customers. Our communities are currently being serviced by an aging and declining wastewater system that needs major and expensive repairs. Private companies like PAWC can maintain and conduct upgrades in a more efficient and effective manner as its statewide network enables them to spread out costs among their large ratepayer base. Specifically, aging laterals are another important issue for our customers that will be alleviated should this deal go through. Currently, if a BASA customer’s laterals need to be replaced or repaired, the customer is required to foot the bill. On average, lateral replacements can cost customers $8,500. As part of the agreement, PAWC will petition the PUC within two years of closing to request approval to initiate a pilot program that will replace or repair customers’ laterals (the pipes that connect homes and businesses to the public sewers to address the stormwater inflow). BASA customers have already experienced costly headaches caused by aging laterals that have failed and damaged their properties. If PAWC acquires BASA and the PUC approves the pilot program, it will spread out the costs of these lateral projects and individual customers will not have to face the burden of spending thousands of dollars.
Impact on the Community
Customers
-
Customers will be guaranteed a minimum one-year rate freeze that would take effect upon closing until the later of the one-year anniversary of the closing or Jan. 1, 2025. BASA’s rates are well-below many other sewer authorities across Pennsylvania and have remained arbitrarily low for years. Because of the operational needs that BASA’s facility currently requires, it will implement a rate increase of $2.50 dollars prior to or on the day the acquisition is finalized. This rate increase is taking place regardless of whether the acquisition occurs because of the extensive upgrades and repairs that BASA’s facility needs. Once this acquisition is finalized, PAWC has guaranteed customers a minimum one-year rate freeze. Currently, BASA can unilaterally raise rates at any time without needing approval from an outside governing agency. If PAWC wants to raise rates on any customers in the future, by law, it must petition the PUC and obtain approval to allow rates to be raised—a process that takes approximately nine months.
-
This will result in a transition from a flat rate fee to a metered rate, meaning customers would only be charged for the wastewater services they use.
-
Additionally, low-income residents will have access to PAWC’s grant programs that will help them pay bills.
-
PAWC will petition the PUC to request approval to initiate a pilot program that will replace or repair customers’ laterals to address stormwater inflow (lateral pipes are the pipes that connect homes and businesses to the public sewers). BASA customers have already experienced costly headaches caused by aging laterals that have failed and damaged their properties. Currently, if a BASA customer’s laterals need to be replaced or repaired, the customer is required to foot the bill. On average, lateral replacements can cost customers thousands of dollars. If PAWC acquires BASA and the PUC approves the pilot program, it will spread out the costs of these lateral projects and individual customers will not have to face the burden of spending thousands of dollars.
Our Local Community
-
As part of this agreement, we have ensured that the current operations center will stay intact for 10 years once the sale goes through.
-
Additionally, the proceeds from this proposed sale would go to the City of Butler and Butler Township because they are the sole owners of BASA.
-
The City of Butler and Butler Township intend to use the proceeds on community investment projects that would support area residents.
Our Employees
-
Under the proposed offer, all employees (union and non-union) would maintain their jobs based on current salaries and collective bargaining agreements.
-
Employees would have access to substantially similar benefits to what they do now (like dental, vision, health insurance and retirement plans).
-
The pensions of retirees will not be impacted by this sale.
Our Environment
-
As we mentioned, BASA’s infrastructure is aging, and with that comes a burden to meet ever-more-stringent environmental standards and regulations.
-
PAW will assume all necessary permits to operate the systems and assume all Pennsylvania Department of Environmental Protection (DEP) and U.S. Environmental Protection Agency (EPA) consents and orders related to the systems.
Open Houses
City of Butler
Date:
Tuesday, September 27, 2022
Time:
Morning Session
10 am – Noon
Evening Session
6 pm – 8 pm
Location:
St. Peter's Social Hall
127 Franklin St
Butler, PA 16001
Butler Township
Date:
Thursday, September 29, 2022
Time:
Morning Session
10 am – Noon
Evening Session
6 pm – 8 pm
Location:
Municipal Building
290 S Duffy Rd
Butler, PA 16001
What Others Are Saying
According to the American Society of Civil Engineers (ASCE) latest infrastructure report card, Pennsylvania’s wastewater systems was given a D—.
ASCE found:
“Aging wastewater management systems discharge billions of gallons of raw sewage into Pennsylvania’s surface waters each year. The average age of most sewer systems is approaching 70 years with many having pipes over 100 years old. 1.6 million homes in PA are served by on-lot systems with failure rates of nearly 20%. Half of the State’s Sewage Facilities Plans are over 20 years old. It is estimated that the Commonwealth has a funding gap of $8.4 billion over the next 10 years to repair existing systems, upgrade existing systems to meet regulatory requirements, control Combined Sewer Overflows, address illicit Sanitary Sewer Overflows, and construct new or expand existing systems to meet increasing demands. Available funding over that time is estimated to be $900 million, approximately 10% of the required annual investment.”
Jordan Grady, President of the Butler County Chamber of Commerce, called the potential sale of the authority to PAWC:
“A great opportunity for our community.” “Not only has Pennsylvania American showed a commitment to make necessary upgrades for the betterment of its customers for 100-plus years, it has a long history of making charitable contributions to various organizations that provide vital services,” Grady said. He said he trusts the commissioners in Butler Township and council members in Butler to properly invest the funds so that they make “profound impacts on the community as a whole.” “The potential sale has the opportunity to be a true win-win for the area,” Grady said.
- Butler Eagle, 8/24/22
Brian White, Superintendent, Butler Area School District said:
“One thing that does strike me is so many communities are going through (increases) because of mandated upgrades from the federal government,” White said. “As an entity that deals with a lot of unfunded mandates, it’s tough.” Still, White said he is not sure BASA has the resources to perform the many upgrades that are needed throughout the sewer system. “They might have to raise rates as much as any entity would (to complete upgrades),” White said.
- Butler Eagle, 8/24/22
Local business owner, Joe Gray of Arris Construction said:
“I am highly in favor of this sale. I think it will be an improvement for everyone,” Gray said. “The way the system is run and the service provided, I believe, will be better.” He said the authority has eschewed rate increases over the years that would have paid for infrastructure upgrades to maintain the system and lines. Now, Gray said, the state Department of Environmental Protection has mandated the system make expensive upgrades without providing any funds to make the repairs. “Regardless of whether the system sells or not, the rates are going up,” he said.
- Butler Eagle, 8/24/22
Resources
Schedules to Sewer Asset Purchase Agreement
Press Release- Asset Purchase Agreement
Press Release- City of Butler Affirms Sale of BASA
Press Release- Butler Township Votes to Affirm Sale of BASA
Signed Asset Purchase Agreement – 10.11.22
Letter to Customers Regarding Potential Sale
Letter to Customers Regarding Signed Asset Purchase Agreement
Press Release- Public Utility Commission Filing
Letter to Customers Regarding Pennsylvania American Water's Customer Notice
Joint Petition for Approval of Unanimous Settlement of All Issues
First Amendment to the Asset Purchase Agreement
Official Statement on Administrative Law Judge's Recommendation to the PUC
Frequently Asked Questions
Q: When will I get my first bill from Pennsylvania American Water?
A: Pennsylvania American Water’s application to acquire BASA’s wastewater system was filed with the Pennsylvania Public Utility Commission (PUC) on February 14, 2023. The company expects to receive all necessary regulatory approvals and close the transaction in late 2023. Once the acquisition is complete, all BASA wastewater customers will receive new customer welcome packets with information about becoming a Pennsylvania American Water wastewater customer.
Q: Will the billing be monthly, and when will the flat rate billing stop or convert to a usage fee?
A: Yes, billing will transition to monthly in the first month after the acquisition closes, expected late 2023. Additionally, In Pennsylvania American Water’s first rate base case it will propose to transition billing from a flat rate fee to a metered rate, meaning you would be charged monthly based on your metered water usage.
Q: I heard Pennsylvania American Water is going to increase rates, what is the expected monthly bill following the rate freeze?
A: You may have received a customer notice in the mail indicating a 1.94x rate increase, it is important to clarify that any rate increase proposed by Pennsylvania American Water is subject to approval by the Pennsylvania Public Utility Commission (PUC). In a recent settlement agreement, Pennsylvania American Water agreed to only increase BASA customer wastewater rates to 1.4 times the current system rate or PAWC’s proposed Rate Zone 1 system-average wastewater rates, whichever is lower, after the one-year rate freeze. This is considerably lower than the rate projection previously shared with the public and reflects a balance between customer interests and the utility's operational needs.
Q: I am on a fixed income, are there programs to help me pay my bills?
Pennsylvania American Water is committed to supporting the community, and they will extend their grant and discount programs to income-eligible residents currently served by BASA. This will ensure that essential wastewater services remain accessible for those in need. Pennsylvania American Water is demonstrating its commitment to supporting customers in need by contributing a total of $3,500,000 to the company's statewide hardship grant program. This contribution has enabled the company to increase eligibility meaning that, if the settlement is approved by the PUC, more customers will qualify for the expanded low-income program.
Q: When can I get a free sewer lateral, should I wait to get the lateral inspection?
A: Pennsylvania American Water will petition the PUC within two years of closing to request approval to initiate a pilot program that will replace or repair customers’ laterals. If the PUC approves the pilot program, wastewater customers can expect to save thousands of dollars on lateral projects through Pennsylvania American Water’s lateral program.
Q: Will the Realty Transfer I&I Inspection program continue after the sale?
A: The program will continue as it's outlined in the community's ordinance, which addresses issues like illegal stormwater connections and deteriorated laterals. To find your community’s ordinance, please visit our website: www.basapa.org/realty-transfer/
Q: When will the $2.50 rate increase take place?
A: BASA’s rates are well-below many other sewer authorities across Pennsylvania and have remained arbitrarily low for years. Because of the operational needs that BASA’s facility currently requires, it will implement a rate increase of $2.50 dollars prior to or on the day the acquisition is finalized, expected late 2023.
Q: Will you guys still have jobs?
A: As part of the proposed acquisition, all employees (union and non-union) would maintain their jobs based on current salaries and collective bargaining agreements. Employees would have access to substantially similar benefits to what they do now (like dental, vision, health insurance and retirement plans).
Q: Will your phone and fax number be the same?
A: Customers can expect to find more details about the transition in the welcome packet that Pennsylvania American Water will provide at the time of closing. Although the phone and fax numbers are expected to remain the same, the packet will include additional information for customers.
BASA Governing Board of Directors
Paul F. Sybert, Chairman
Fred M. Vero, Vice Chairman
Mavrik W. Goepfert, Treasurer
Lance R. Calvert, Secretary
Steven C. Braden, Assistant Secretary and Treasurer
City of Butler
Mayor Bob Dandoy
Council Member Daniel G. Herr
Council Member Donald L. Shearer
Council Member Larry W. Christy
Council Member Frederick W. Reese
Butler Township
Commissioner Dave Zarnick, President
Commissioner Sam Zurzolo, Vice President
Commissioner Joseph A. Wiest
Commissioner James Lokhaiser, Jr.
Commissioner Edward Natali