The Public Utility Commission this week adopted a policy statement on water and wastewater system acquisition incentives which enhances the Commission’s goals to promote water system viability and regionalization.

The Commission voted unanimously to approve the policy statement that provides additional guidance for companies acquiring small, chronically compliance-challenged or otherwise troubled water systems, while ensuring fair treatment of customers.

The policy statement provides guidance on when and how utilities interested in making an acquisition should prepare and submit original cost documentation that determines the appropriate value of the assets of an acquired system.

In addition, it provides the opportunity for acquiring utilities to earn an acquisition premium for the purchases of companies that may not be as severely troubled, but the purchase will still improve the overall long-term viability of the water and wastewater industry.

Many small water systems have varying degrees of operational constraints that impact their viability. The Commission has a policy of encouraging well-operated water and wastewater utilities to regionalize or consolidate the smaller systems. The limited resources – managerial, financial or technical -- of these smaller systems can result in less than reliable service for ratepayers.

The policy statement supports the Commission's regionalization efforts, which in recent years has allowed ratepayers from of the smaller, more troubled systems to experience improved service after being acquired by a larger more viable water system.

The policy statement will become effective upon publication in the Pennsylvania Bulletin.

8/18/2006