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Editorial: Is Aqua looking to sink the Chester Water deal?

Chester Water Authority bottles sits on table during a recent meeting of its board.
MEDIANEWS GROUP FILE PHOTO
Chester Water Authority bottles sits on table during a recent meeting of its board.
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Just when it appeared the waters were calming, there is some new intrigue swirling around the Chester Water Authority.

When we last visited the drama between the iconic water company and the city that it calls home, it appeared a truce had been declared and a deal struck to keep the company whole.

You might remember that Chester, under the watchful eye of state overseers who are trying to guide the city out of its long-standing status as a “distressed city, had its eyes on a potential sale of Chester Water Authority. The revenue would be used to help the city exit Act 47.

As you might imagine, this did not sit especially well with the water company board, which had just fended off an unsolicited $250 million buyout offer from the giant public utility Aqua America Inc.

The Chester Water board and rate payers, fearing a hefty rate hike rejected Aqua’s offer, even after the public utility giant sweetened the pot with a promise not to raise rates for the 40 municipalities in Chester and Delaware Counties that use the sparkling water that Chester Water pipes in from the Octoraro Reservoir on the Chester-Lancaster County border.

No sooner had that crisis been averted, when the city started making noises about its right to sell off all or a chunk of the longtime Delco business icon.

Eventually, the two sides cut a deal. Chester Water would kick in $60 million to help the city crawl out of its fiscal morass. In exchange the city would drop any claim to sell off all or part of the company for the next 40 years.

And where would the money come from? A 10 percent rate hike on customers.

Gulp!

The Chester Water Authority board approved the deal. It is now awaiting approval by Chester City Council. From there it will go to the Delaware County Court of Common Pleas for final approval.

Obviously, the CWA board and customers aren’t thrilled with the notion of a rate hike, but they certainly prefer it to the idea of the company being chopped up or sold off entirely.

So they swallowed hard and signed off on the deal.

Everybody’s happy, or at least as happy as could be expected, right?

Well, maybe not.

It seems not everybody is thrilled with what some are calling a rate hike that is basically being used to bail out Chester.

And who might that be?

The folks from Aqua. Chris Franklin is the boss at Aqua America Inc. Since they withdrew their offer for Chester Water, they have continued to gobble up utilities, most recently dropping $4.3 billion for Peoples Gas Co. of Pittsburgh.

During an earnings call this week, Franklin raised a few eyebrows by noting Aqua may once again have its eye on Chester Water, especially in light of the fact that the big reason their initial offer was rejected was because of fears of a rate hike, which is what Chester Water customers in Chester and Delaware counties are now staring at courtesy of the deal brokered between CWA and the city.

Franklin has gone so far as to indicate that Aqua may go to Delaware County Court to oppose the deal “as a customer.” Aqua has several facilities in Chester Water territory.

Franklin’s belief is clear. The deal is using suburban rate payers to shore up Chester’s finances, to the tune of $60.2 million.

“That’s two and a half million dollars a year with no benefit whatsoever to any single customer or any group of customers,” Franklin said. “It just seems wrong and we’re not happy about it, so we’re going to look at our options.”

That gives him something in common with Frank Catania. He’s the longtime Chester Water Authority solicitor. Catania scoffed at Franklin’s suggestion, noting the benefit for CWA customers is that the private company would not get bought out by a giant public utility – kind of like Aqua – and face rates that could double.

Catania said CWA has not raised rates in eight years and questioned why a public utility such as Aqua would use ratepayers’ money in an attempt to block the CWA rate hike.

Approximately 22 percent of Chester Water’s 22,000 customers reside in the city, while the remaining 78 percent sit elsewhere, sprinkled among 17 Delaware County municipalities and another 16 in Chester County.

Chester Mayor Thaddeus Kirkland this week said the city’s lawyers are continuing to review the proposal, but that the city is still committed to the deal and at this point has a put a “stand-still” on any other offers.

Of course, that could change should Aqua be successful in blocking the rate hike that is the linchpin to the CWA deal with the city.

It’s not hard to imagine Aqua once again courting the city – and a possible sale of Chester Water – should the deal suddenly take on water and be scuttled in court.

Strap on those life vests. It appears Chester Water Authority might be heading back into some choppy waters again.