Harrisburg considers selling water authority to private company

The city of Harrisburg is considering options to sell its water authority to a private company.

The city’s request for letters of interest comes as Capital Region Water prepares to add a stormwater fee to residents’ monthly bills beginning in 2020. 

Harrisburg city engineer Wayne Martin said a 2016 change in state law — which requires that municipal authorities are assessed at fair market value — means the sale of Capital Region Water could garner more than $250 million.

That cash infusion would help the debt-ridden city, Martin said, and there are other potential benefits as well. 

Unlike municipal water authorities, private companies have to follow strict rules set by the Pennsylvania Public Utility Commission, Martin said. They would be likely to have more money than the struggling water authority to get infrastructure projects done. 

“We had a sinkhole open up and Capital Region Water dug the hole, and the road remained closed and the sewer open for almost a month,” Martin said. “And that wouldn’t happen with a private entity and the PUC, I promise you that.”

On the other hand, private companies are known for increasing rates, Martin noted. By asking for letters of interest from PUC-approved companies Aqua, Suez and American Water Works, the city can weigh the pros and cons of going private. 

The city’s plan came as a shock to Capital Region Water, said Chairman Marc Kurowski. The authority wasn’t notified until the request was online Friday. 

“It was pretty much a unilateral decision by the mayor,” Kurowski said. 

He noted that in addition to Harrisburg, Capital Region provides drinking water and wastewater services for parts of Penbrook, Paxtang and Steelton boroughs and Susquehanna, Swatara and Lower Paxton townships.

Water authority officials are also raising concerns that privatization could lead to price increases. A recent study from the Pennsylvania Municipal Authorities Association shows privatization led to a 60 percent increase for residents on average, said Charlotte Katzenmoyer Capital Region Water’s CEO.

Katzenmoyer said estimates of the authority’s fair market value are premature. Additionally, Capital Region is laden with bonds and other financial responsibilities. 

“There’s not been evaluation done, so to ask for a private company to bid, you’re basically asking the company to bid, and you don’t know if that’s a fair cost or not,” Katzenmoyer said.

Privatizing won’t get rid of the stormwater problem either, Kurowski said. The water authority is in a consent decree with the state Department of Environmental Protection and federal Environmental Protection Agency to do something about the raw sewage that flows into the Susquehanna River every time there’s heavy rain. 

Capital Region Water is responsible for upholding the consent decree “unless and until the EPA and DEP would consent to relieve Capital Region Water of those obligations upon any transfer,” said DEP spokeswoman Elizabeth Rementer. 

“If Capital Region Water was dissolved, the responsibilities would revert to the City of Harrisburg as the city was the entity that created Capital Region Water,” Rementer said.  

Companies have until September 16th to respond to the city’s request.