PA American Water has indicated its wishes to buy the Indian Creek Valley Water Authority (ICVWA). If successful, the move would result in privatizing the now-public entity, reflecting a larger state-wide trend of such sales. A Water Confidentiality Agreement, dated June 25, 2022, with American Water was signed by the ICVWA Board and its incorporating municipalities–Saltlick and Springfield. Confidentiality agreements like these have been seen all over the state and are often the first step in the process of privatization. The agreement was scheduled to expire on January 31, 2023, but the sale is still being considered as of the publication of this article.
The potential sale of the ICVWA comes at a time when access to clean water is becoming increasingly more challenging, both locally and across the country. In the Indian Creek Valley, historic and ongoing coal mining activities have impaired groundwater supplies, impacting the quality and quantity of private water sources that many households rely on. As a result, the only way to access potable water for many would be by extending public water lines to serve residents in need.
PA American Water is a subsidiary of American Water Works Company, which is the largest publicly traded water company in the nation. As a result, they have access to the assets and resources needed to front the cost of system improvements such as extending water lines. Water line extensions are often cost prohibitive in rural areas where, for example, a line may cost $600,000 to build but only serve 6-8 people. If PA American Water were to cover such an investment, the costs could be spread out among ratepayers across the state since the company’s water rates are state-based. By the same token, when an investment is made in PA American Water’s system in another part of the state, local ratepayers may pay for that as well.
On the other hand, municipal water authorities – such as ICVWA – largely rely on grant funding in order to pay for infrastructure improvements. As a result, ratepayers in public systems do not bear the full financial cost of system upgrades, but projects may take longer to implement while grant funding is pending. Many of these grants are only available to public entities, so private companies like PA American Water are not able to apply to offset the costs of system improvements. That said, in some cases local municipalities may be able to apply for grants to fund necessary upgrades that would then be implemented by a private water authority like PA American Water.
Because PA American Water is a publicly traded company, their highest priority is to create profit for its shareholders, by any means necessary. On the other hand, a municipal authority’s responsibility is solely to its ratepayers, making it less of an incentive to implement large rate hikes. As a result, studies have found that rates for customers with private water authorities are, on average, 59% higher than those for public utilities. 1
If the sale were to go through, the nature of the relationship between the water authority and local residents could also change. A municipal water authority’s board and staff are made up of local community members, whereas PA American’s leadership and field staff would most likely be based out of their existing offices in Pittsburgh and Philadelphia. Private utilities are not required to have public meetings that allow community input and are not required to follow the same disclosure laws as a public entity, whereas the ICVWA is required to have open meetings and share more of its information with the public.
It has been reported, however, that PA American Water may offer other community incentives to the sale proposal, such as potentially installing water fountains at locations such as the Indian Creek Valley Trail, among other items. To note, any funds received as part of the sale would be split between the two incorporating townships of the ICVWA: Saltlick and Springfield. The other municipalities that rely on ICVWA’s water and infrastructure – Donegal Borough, Donegal Township, Mount Pleasant Township, Ohiopyle Borough, Stewart Township, Bullskin Township, and Connellsville Township – would receive no profits generated by the sale.
Further, PA American Water purchasing the ICVWA may open the door for the water of the region to be sold and exported in bulk. Many large water companies boost business by selling off local water resources to other areas, and PA American Water is already known for selling water resources to extractive industries.2 The sale of bulk water supplies may earn significant profits for private water companies, but the local community may feel the impacts as clean water resources worldwide become more scarce.
Ultimately, clean water of our region is one of our most valuable assets, which is still being repaired from the impacts of mining through the hard work of local elected officials and community groups such as the Mountain Watershed Association. Now and in the future, it is critical that the resource is managed responsibly and equitably so that it remains available for all who depend on it.
Before a decision is made to sell the water authority, it is critical that decision-makers hear from local residents. Please click the following link to fill out a public opinion survey, the results of which will be anonymously provided to the ICVWA Board and the township supervisors of both Saltlick and Springfield. If you have any questions or concerns, please reach out to Madison Hinkle at firstname.lastname@example.org.
Public Opinion Survey: https://bit.ly/ICVWAsurvey
- X. Zhang, M. González Rivas, M. Grant & M. E. Warner, Water pricing and affordability in the US: public vs. private ownership, 24 Water Policy 500 (Mar. 17, 2022), https://iwaponline.com/wp/article/24/3/500/87702/Water-pricing-and-affordability-in-the-US-public.
- Why the Water Industry is Promoting Shale Gas Development, Food and Water Watch (Dec. 2011), https://docshare.tips/why-the-water-industry-is-promoting-shale-gas-development_578c8ae9b6d87f9c1d8b4aad.html.