Pittsburgh mayor Bill Peduto says PWSA at financial crossroads
The Pittsburgh Water and Sewer Authority has two choices: squeeze more than $2 billion needed for replacing outdated and failing infrastructure from 80,000 ratepayers, or partner with a private company to defray some of those costs, Mayor Bill Peduto said Tuesday.
Peduto is adamant about maintaining PWSA as a publicly owned system, but he’s open to suggestions from private enterprise on a partnership that would generate additional revenue.
The mayor said he’s received more than a dozen offers from companies interested in providing the city with water, including Peoples Gas and Pennsylvania American Water. Peduto said Pennsylvania American, which provides water to the city’s South Hills residents, has offered to purchase the authority outright, but the company said it has not offered an official proposal.
Residents and activist groups such as Pittsburgh United have opposed any type of private involvement with PWSA.
“What we know is it’s going to require well over $2 billion worth of investment, and the money will not magically appear,” Peduto said. “It comes from a limited number of subscribers, 80,000. If we have a system that relies upon the 80,000 to pay the over $2 billion I’m not sure where they’re suggesting the money would come from, and if we don’t invest then our water system will fail.”
The mayor said he supports PWSA’s request that’s subject to Pennsylvania Public Utility Commission approval for a 16.7 percent rate increase. He said more rate hikes will be necessary in the future because the authority is in dire need of capital improvements.
Aly Shaw, a Pittsburgh United organizer, said the group understands PWSA needs money and it is not opposed to rate hikes as long as the authority continues to provide programs that help low income residents pay their bills.
“We don’t want our rate increases going to corporate profits, which is what would happen if PWSA were to enter into a public/private partnership, or if PWSA was privatized.”
Peduto said he’s asked PWSA to create a proposal by September’s end for a 12-year plan of improvements that will eliminate all lead water pipes and guarantee the city safe drinking water for the next 50 years.
He said the city would seek proposals from private companies at some point during the last four months of the year.
Peoples Gas has proposed the creation of Peoples Water, a subsidiary that would build a new water plant to supply the city. Peduto said Pennsylvania American Water has promised it can deliver water “much” cheaper than PWSA.
“Pennsylvania American Water hopes that the city’s request for proposals is an open and transparent process, which considers all options – including acquisition,” company spokesman Gary Lobaugh said. “We firmly believe that an acquisition of the PWSA system is the best solution as it would provide an opportunity to regionalize the area’s water infrastructure, strengthen system resiliency, and most importantly provide safe, affordable drinking water for the authority’s customers.”
Peduto said PWSA cannot continue to operate as it has.
“I’ve heard from over a dozen utilities companies, financing corporation, others that have had unsolicited proposals of how they could provide water safely and cheaper,” Peduto said. “My first opportunity will be to see how PWSA can operate this system for the future. The second will be to open it up to a global challenge to see who else could do it potentially better and for less money. I owe the people of Pittsburgh the opportunity to at least see what else is out there.”
Bob Bauder is a Tribune-Review staff writer. You can contact Bob at 412-765-2312, [email protected] or via Twitter @bobbauder.