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PUC tightens review of water-system acquisitions; flags PFAS compliance costs for small utilities
Summary
PUC Chair Steve DeFrank said the commission has proposed measures to increase transparency and consistency in investor-owned acquisitions of municipal water systems and is monitoring PFAS/PFOA federal and state rules that may impose significant compliance costs on small water providers.
Steve DeFrank, chairman of the Pennsylvania Public Utility Commission, described steps the commission has taken to increase oversight of municipal water and wastewater system acquisitions and to address PFAS (per- and polyfluoroalkyl substances) contamination and the associated compliance costs.
DeFrank said the PUC has focused on acquisitions under the public utility code’s municipal-acquisition provisions. He described measures the commission introduced in February 2024 to improve transparency and consistency in evaluating those transactions: requiring at least two public meetings before a sale agreement is finalized, mandating seller notice to customers about potential rate impacts, establishing uniform valuation guidelines for appraisals, and developing a reasonableness-review ratio to compare proposed acquisition prices against industry benchmarks.
On failing and distressed systems, DeFrank cited the commission’s authority to require capable utilities to acquire struggling systems under section 529 of the Public Utility Code (PUC testimony used the ‘‘section 5 29’’ phrasing). He listed several ongoing section 529 matters (as stated in testimony) including Kahnawatt Lake Park Water, Rock Spring Water, and Venango Water as examples of cases where the commission has intervened.
DeFrank also warned that recent regulatory actions on PFAS will increase compliance costs. He said the Pennsylvania Department of Environmental Protection set maximum contaminant levels for PFOA and PFOS in January 2023 and that the U.S. Environmental Protection Agency issued a final rule in April 2024 that establishes stricter federal limits, increasing treatment and compliance costs—costs that large utilities can absorb more easily than small, municipal or privately owned water providers. The PUC said it is coordinating with DEP and the Small Water Task Force to monitor financial impacts and assist small and mid-sized utilities with compliance.
Ending: The PUC said it will continue to oversee acquisitions, intervene in distressed systems where necessary, and work with DEP and other task forces on PFAS compliance plans for smaller systems. Lawmakers heard that these changes aim to protect ratepayers while allowing needed investments in aging water infrastructure.
