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Pennsylvania American buys McKeesport wastewater assets for $159M

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Pennsylvania American Water, the Dauphin County-based subsidiary of publicly traded American Water Works Co., has completed the $159 million acquisition of a large municipal wastewater system in the Pittsburgh area.

Announced in September 2016, the deal is for the McKeesport wastewater system, which serves about 22,000 customers in 13 municipalities in Allegheny County. It's the latest wastewater acquisition for Pennsylvania American, which has been adding to its footprint across the commonwealth. 

Recent deals include the $195 million acquisition of the Scranton Sewer Authority's wastewater system.

The Municipal Authority of the City of McKeesport initially issued a request for bids in June 2016.

"The crux of this transaction is bringing financial stability to the City of McKeesport and saving our taxpayers from Act 47 municipal bankruptcy," Mayor Michael Cherepko said. "When we think about it, the privatization 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."

Completion of the deal follows a regulatory review and approval process by the U.S. Environmental Protection Agency, the state Department of Environmental Protection, the state Public Utility Commission  and Allegheny County Health Department.

Under the purchase agreement, Pennsylvania American Water has said it will not increase base wastewater rates for at least one calendar year. The company’s rates are regulated by the PUC and any future rate changes would have to be reviewed and approved by the PUC.

Pennsylvania American Water now owns wastewater systems in 12 counties across the commonwealth.

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Jason Scott

Jason Scott

Jason Scott covers state government, real estate and construction, media and marketing, and Dauphin and Cumberland counties. Have a tip or question for him? Email him at jscott@cpbj.com. Follow him on Twitter, @JScottJournal.

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