Subsidy's End Would Raise Water Rates for Some Panel Suggests Shoring Up Finances at Pwsa by Ending Payments to Private Water Firm

By Smeltz, Adam | Pittsburgh Post-Gazette (Pittsburgh, PA), February 4, 2018 | Go to article overview

Subsidy's End Would Raise Water Rates for Some Panel Suggests Shoring Up Finances at Pwsa by Ending Payments to Private Water Firm


Smeltz, Adam, Pittsburgh Post-Gazette (Pittsburgh, PA)


Thousands of households in Pittsburgh's south and west neighborhoods could face higher water bills as the city shores up its biggest water utility.

For more than 40 years, families and businesses from Fairywood and Sheraden southeast to New Homestead and Lincoln Place have paid discounted rates under the city's arrangement with Pennsylvania American Water Co., the private-sector water utility supplying those areas. A multi-million-dollar subsidy paid by the Pittsburgh Water and Sewer Authority, which serves most of the city, keeps pricing identical across the two service areas.

That subsidy should vanish to help PWSA bolster its shaky finances, according to a blue-ribbon panel that's exploring how to mend the troubled municipal authority. The recommendation appears among the group's seven ideas for PWSA operations, such as ditching free water for city facilities and nixing a longtime residency requirement for authority workers.

Still, the prospect of new water pricing rankled city Councilman Anthony Coghill, whose South Hills district includes Beechview and Brookline.

"If the plan is simply dropping the subsidy to Pennsylvania American customers so we get to pay higher rates over here - that, to me, is no plan at all," Mr. Coghill said. He said he thought the idea was a literal joke.

Panel member Alex W. Thomson, a former PWSA board president, wasn't laughing. He said it didn't make sense to him that "a public authority should be subsidizing a private company." Mayor Bill Peduto, who appointed the panel last year, said PWSA needs more than $2 billion in infrastructure work.

It also counts nearly $1 billion more in debt.

"I just don't think, from an equitable standpoint, that it makes sense that a PWSA water customer pays more so that a Pennsylvania American customer can pay less - especially given the nature of the two systems in terms of the infrastructure and capital needs of the PWSA system," Mr. Thomson said.

PWSA paid Pennsylvania American nearly $5 million for the three years that ended in December 2016, a state audit found. Auditor General Eugene DePasquale recommended in November that PWSA "reduce and ultimately close the subsidy gap."

Should the city drop the subsidy, the 27,000 Pennsylvania American customers in Pittsburgh would face the company's standard rates for tap water, spokesman Gary Lobaugh confirmed in a statement.

Pennsylvania American customers outside city limits already pay those prices, which appeared around 25 percent higher than PWSA rates in an analysis by Pennsylvania American. The calculation assumed average residential use of 3,000 gallons a month.

Because PWSA and Pennsylvania American differ in their billing methodology, it's tough to calculate a direct pricing comparison. PWSA charges typical residential customers $23.25 a month for their first 1,000 gallons, then $9.41 for each 1,000 gallons thereafter. Pennsylvania American charges similar customers outside the city a $16.50 monthly service fee and about $1.22 per 100 gallons. …

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