Last night, the Board of Supervisors voted to amend their agenda to include an update on the status of the sewer sale. NextEra Water Pennsylvania LLC (NextEra), the intended buyer of Towamencin’s Sewer System, recently made the Township aware of its business decision to redirect efforts away from water and wastewater acquisitions to focus more on renewable energy projects. This decision, mainly due to the passage of the Inflation Reduction Act, affects all NextEra’s water and wastewater assets, including its Asset Purchase Agreement (APA) with Towamencin Township. Toward this end, NextEra intends to assign its contractual rights and obligations under the APA to Pennsylvania American Water (PA American).
PA American is the largest water and wastewater utility in the Commonwealth. With nearby operations in Norristown, Royersford, Yardley, Coatesville, and Upper Pottsgrove, PA American can create efficiencies and synergies in its operations and create savings for residents. They also have the ability to allocate costs across approximately 760,000 customers, thereby stabilizing the impact of the considerable capital investments made in their systems. In addition, PA American provides substantive financial assistance and hardship grants. In 2021 alone, PA American provided customers $4.5 million in bill discounts and $770,000 in hardship grants.
This ownership change relative to the APA requires Board action, including: an amendment to the APA; preparation of an Assignment Agreement; and an amendment to the Sewer Sale Ordinance.
The APA Amendment will include:
- A revised sale price of $104 million (the average of the two utility valuation expert appraisals)
- Removal of the 2-year rate freeze
- Return of additional deposit and escrow monies to Next Era
- Change to “Outside Date” definition to accommodate for any unforeseen hurdles that may arise
The Assignment Agreement will assign NextEra’s interests in the APA to PA American.
The Sewer Sale Ordinance Amendment will include replacing NextEra with PA American as the Successful Bidder.
If such action is taken by the Board, PA American will file with the PA PUC. The PUC approval process will then commence with PA American as the successor.
As consideration for this ownership change and its associated costs, NextEra will pay Towamencin Township $600,000—which includes the initial $100,000 deposit and an additional $500,000.
By a 4 to 1 vote, the Board authorized the Township Solicitor and Special Counsel to take all needed steps to prepare the APA Amendment; Assignment Agreement; and the Sewer Sale Ordinance Amendment for Board consideration at its March 22, 2023 meeting.
