Pennsylvania American Water Completes Acquisition of Royersford Borough Wastewater System

Rhea-AI Summary

Pennsylvania American Water, a subsidiary of American Water (NYSE: AWK), has finalized its acquisition of the wastewater system assets of Royersford Borough for $13 million. This system serves nearly 1,600 customers in Royersford and Upper Providence Township. The Pennsylvania Public Utility Commission approved the acquisition, which includes a commitment to invest $1.6 million in system improvements over five years. The acquisition allows for better service efficiency and long-term investments, while existing rates will be adopted, changing billing from quarterly to monthly.

Positive

• Acquisition enhances service efficiency for 1,600 customers.
• Commitment to invest $1.6 million in improvements over five years.
• Existing wastewater rates maintained, aiding customer stability.

Negative

• Need for significant capital investments highlighted.
• Potential for increased operating costs in future.

Pennsylvania American Water, a subsidiary of American Water (NYSE: AWK), announced today that it has completed the acquisition of the wastewater system assets of Royersford Borough, Montgomery County. The newly acquired system provides wastewater service to nearly 1,600 customers in Royersford and a portion of Upper Providence Township. Pennsylvania American Water already provides water service to residents and businesses in those communities.

“Our employees have been providing water service to the residents of Royersford for many years, and we are pleased to now be their wastewater provider as well," said Pennsylvania American Water President Mike Doran. “Expanding our services in this area is a natural fit, allowing us to provide greater efficiencies for our customers while making much needed long-term investments.”

Pennsylvania American Water plans to invest approximately $1.6 million in Royersford wastewater system improvements over the next five years. This includes replacing aging sewer mains, improving chemical feed systems, upgrading technology, telemetry and system controls, and improving site security. The company has a long and successful track record of acquiring wastewater systems facing significant capital investment needs and making the necessary investments to meet environmental regulations.

The $13 million purchase was approved by the Pennsylvania Public Utility Commission (PA PUC) and other state agencies. As part of the PA PUC’s approval, Pennsylvania American Water agreed to adopt the existing wastewater rates for customers served by the borough, although service will now be billed on a monthly rather than a quarterly basis. The PA 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 PA PUC.

Borough Council pursued selling the system in December 2019 after conducting a complete evaluation of the Borough’s long-term needs and concluding that the sale was in the best interest of its residents. The Borough cited the potential for increased operating costs, maintenance and major capital improvement needs as reasons to seek a long-term wastewater solution. Today, the company welcomed the Borough’s two employees as employees of Pennsylvania American Water.

“Today, Royersford Borough residents became part of a larger scale, efficiently operated wastewater utility that brings expertise to our aging sewer system,” said Royersford Borough Council President Anil Dham. “We will use the proceeds of this sale to take on other important capital projects, pay off all municipal debt, and potentially lower the cost of living here in Royersford by further stabilizing our tax base.”

Earlier this month, the company also completed the acquisition of the 38-customer Delaware Sewer Company in Delaware Township, Pike County. The transaction occurred after a PA PUC investigation found that the system suffered from a lack of investment and proper maintenance. As part of the investigation, Pennsylvania American Water was determined to be the capable utility that could provide the necessary immediate and long-term wastewater system upgrades to serve this community.

“We appreciate that the Commission recognized our track record in taking over troubled systems and committing the technical expertise and resources needed to bring these operations into regulatory compliance,” Doran stated.

Pennsylvania American Water recognizes that some customers face circumstances that stretch their financial resources and offers financial assistance through the company’s H2O Help to Others program. For wastewater customers who qualify, the company offers grants of up to $500 per year and a 30 percent discount on the total wastewater charges.

Pennsylvania American Water, a subsidiary of American Water (NYSE: AWK), is the largest investor-owned water utility in the state, providing high-quality and reliable water and/or wastewater services to approximately 2.4 million people. With a history dating back to 1886, American Water is the largest and most geographically diverse U.S. publicly traded water and wastewater utility company. The company employs more than 7,000 dedicated professionals who provide regulated and market-based drinking water, wastewater and other related services to an estimated 15 million people in 46 states. American Water provides safe, clean, affordable and reliable water services to our customers to help make sure we keep their lives flowing. For more information, visit amwater.com and follow American Water on Twitter, Facebook and LinkedIn.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210525005963/en/

FAQ

What is the value of the AWK acquisition of Royersford wastewater system?

The acquisition is valued at $13 million.

When was the acquisition of the Royersford wastewater system completed by AWK?

The acquisition was completed recently, as announced in the press release.

What improvements will AWK make to the Royersford wastewater system?

AWK plans to invest approximately $1.6 million in system improvements over the next five years.

How many customers will benefit from the Royersford wastewater system acquisition by AWK?

Nearly 1,600 customers in Royersford and Upper Providence Township will benefit.

What regulatory approval did AWK obtain for the acquisition?

The acquisition was approved by the Pennsylvania Public Utility Commission.