Chester receiver challenges Water Authority's 14% rate hike, seeks audit and public hearings

Vijay Kapoor, the city receiver for Chester, said at the Municipal Financial Recovery Advisory Committee meeting Oct. 14 that the Chester Water Authority announced an emergency 14% rate increase in a letter to customers and by email and that the increase would be effective Jan. 1, 2026.

Kapoor said CWA's public letter blamed the receivership and the city for uncertainty that, the authority said, prompted Moody's to downgrade CWA’s rating and forced it to turn to a specialty lender at higher rates. Quoting the letter, Kapoor said it included language that "over 80% of CWA's customers live outside the city of Chester, but all ratepayers are and will continue to be affected by the city's actions... your ongoing expense," a characterization he described as inflammatory and stigmatizing to Chester residents.

The receiver disputed CWA's framing. He told the committee that Moody's specifically cited a decline in debt service coverage and liquidity after a contraction in usage by a major wholesale customer and that much of that financial deterioration predated the receivership and the bankruptcy filing. Kapoor identified Aqua as the wholesale customer and said wholesale revenue fell from about $6.98 million in 2021 to roughly $4.38 million in 2022, a drop he estimated at about $2.6 million.

Kapoor said the receivership sent a list of substantive questions last Tuesday to CWA board chair Noel Brandon requesting: the identities of the financial institutions that declined to refinance CWA; documentary evidence of those refusals; the identity, rates and terms of the specialty lender cited by CWA; the amounts owed to CWA by the city and the closed Crozer-Chester Medical Center and why CWA did not file a proof of claim; and the authority's spending on marketing and legal representation. He said he received a brief response from Chairman Brandon five minutes before the MRAC meeting that did not answer those questions.

Because those questions remain unanswered, Kapoor said the receivership is requesting public hearings before rates become effective and has asked for an independent audit and a review of CWA's management, operations and legal expenses, excluding attorney-client privileged material. "We are also calling for CWA to publicly provide the same information that a private utility would be required to disclose in a rate case before the Pennsylvania Public Utility Commission," Kapoor said.

Kapoor also raised concerns about CWA's legal spending. He said the authority has repeatedly expanded its legal team with out-of-town and specialty counsel, filed motions the bankruptcy court has denied, and has not publicly disclosed how much it is spending on legal fees and on the marketing effort opposing monetization. "Lawyers are not cheap," Kapoor said, and without clarity the public cannot judge how legal and marketing expenses factor into proposed rate increases.

On the receivership's monetization process, Kapoor said the office agreed to add a clarifying sentence to the monetization request for proposals after a lawsuit from a retirees' committee that sought consideration of privatizing bids. The added language states, in effect, that bids proposing private ownership "will not be disqualified." Kapoor said that insertion was a narrowly tailored, technical resolution intended to avoid later procedural objections at plan confirmation, not a change in policy: he and his predecessor, Michael Dowry, remain committed to keeping the assets publicly owned and have retained the authority to approve any monetization deal, subject to bankruptcy court approval.

A councilmember asked what effect a Pennsylvania Supreme Court ruling on ownership might have. Kapoor said he had no insight into the court's likely decision and reiterated the receivership's position that monetization is necessary to access the city's asset value.

Kapoor closed by urging CWA to provide the requested documentation and said the next MRAC meeting is scheduled for Oct. 28. He encouraged ratepayers to submit comments to info@chesterreceivership.com and said the receivership would continue to press for transparency and a public hearing on the rate increase.