Pennsylvania American Water buys MACM’s wastewater system assets for $159m

Pennsylvania American Water has acquired the wastewater system assets of the Municipal Authority of the City of McKeesport (MACM).

Valued at approximately $159m, the transaction is the first acquisition completed under Pennsylvania’s Act 12 of 2016. Under the act, municipalities can sell water and wastewater systems on the fair market value basis.

Pennsylvania American Water president Jeffrey McIntyre said: “As the first finalised sale under Pennsylvania’s Fair Market Value legislation, this acquisition establishes a strong example for other communities to consider.

“Prior to the passage of Act 12, the depreciated cost of this system might have prevented the City of McKeesport from the opportunity for financial stability.”

This acquisition, approved on 26 October 2017, increases the company’s portfolio of municipal wastewater transactions.

The MACM wastewater system serves nearly 22,000 customers including bulk contracts in 13 municipalities in Allegheny County.

Pennsylvania McKeesport Mayor Michael Cherepko said: “The crux of this transaction is bringing financial stability to the city of McKeesport and saving our taxpayers from Act 47 municipal bankruptcy.

“When we think about it, the privatisation of local sewage services truly makes sense. The city isn’t involved in other utility businesses – gas, electric, water – and this is a final step in providing consistent, regulated utility services to our community.”

The acquisition will be put through a regulatory review and approval process by the US Environmental Protection Agency (EPA), Pennsylvania Department of Environmental Protection (DEP), the Pennsylvania Public Utility Commission (PUC) and Allegheny County Health Department.

As per the purchase agreement, Pennsylvania American Water will not increase base wastewater rates within a year without the approval of PUC.

In addition, MACM employees have been offered employment with training, development and career opportunities in any of the operations of Pennsylvania American Water or its parent company.

Pennsylvania American Water provides wastewater services to approximately 2.3 million people.