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02/24/2024 01:17 AM
Pennsylvania House of Representatives
https://www.legis.state.pa.us/cfdocs/Legis/CSM/showMemoPublic.cfm?chamber=H&SPick=20230&cosponId=41771
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House of Representatives
Session of 2023 - 2024 Regular Session

MEMORANDUM

Posted: November 20, 2023 03:57 PM
From: Representative Robert F. Matzie and Rep. Lisa A. Borowski, Rep. Liz Hanbidge, Rep. Carol Kazeem, Rep. Leanne Krueger, Rep. Jennifer O'Mara, Rep. Christina D. Sappey
To: All House members
Subject: Reforming Act 12
 
Act 12 of 2016 made significant changes to the way that water and wastewater systems were valued for acquisition. The intent of the Act was to provide incentives for regulated public utilities to acquire failing or stressed municipal systems that could no longer provide safe, reliable service to their customers.

However, in the ensuing years, it’s become clear that the manner in which the Act has been used has run far afield of that original intent.

The PUC, who is tasked with reviewing these sales, has been hamstrung by an unreasonable statutory requirement limiting the time period for which they have to review these deals. The result has been that the vast majority of acquisitions, since the implementation of Act 12, have been well-run and well-maintained systems, not failing or stressed.

In fact, in almost every instance to date, the municipalities or municipal authorities have exercised the provisions of the Act to sell healthy systems at amounts much greater than their current value. This has resulted in taxpayers and ratepayers being hit with exorbitant rate increases, with no discernable difference or improvement of service. What’s worse, the selling authorities oftentimes commence these transactions with little notice to taxpayers or ratepayers. Simply put, the public rarely has an opportunity to weigh in on or find out about a pending sale until it’s too late. This can’t be allowed to continue.

I am introducing a package of bills – along with my colleagues Reps. Borowski, Hanbidge, Kazeem, Krueger, O’Mara and Sappey – to place much needed guiderails on Act 12. The package will still permit struggling systems to be acquired at the current levels. But will greatly limit the amount on acquisitions of healthy systems, ease the immediate burden on ratepayers by spreading out any costs incurred, provide the PUC with ample time to review these sales more thoroughly, and place stringent notification requirements on both buyers and sellers from the formal inception of a sale.

To be clear, no entity in these sales has operated illegally. They have operated within the confines of the current law. That’s why it’s up to us in general assembly to tighten that law. We often say that certain laws may have “unintended consequences.” Act 12 is one of those laws. We have a chance to fix it. I hope you’ll agree.
 



Document #1

Introduced as HB1863

Description: Removes the PUC evaluation deadline which is currently 6 months.
 

Document #2

Introduced as HB1865

Description: Caps the acquisition amount at 125% of the depreciated original cost.
 

Document #3

Introduced as HB1864

Description: Spreads increased costs to ratepayers gradually, rather than all at once.
 

Document #4

Introduced as HB1862

Description: Imposes new notification requirements on all parties.