STRATTANVILLE - Pennsylvania-American Water Co. has expressed interest in purchasing a section of the Strattanville Municipal Authority's sewerage collection system.
The subject was on the agenda for discussion at the Strattanville Municipal Authority's Sept. 8 meeting, but that session was not held due to a lack of quorum.
Borough and municipal authority secretary Roxanne Davis said the borough was contacted by a PAWC representative after news of a recent rate increase in Strattanville made the news.
The Strattanville Municipal Authority has asked PAWC in past years if it was interested in the section of the system known as the "322 corridor," but at that time PAWC was not interested in purchasing the section.
The "corridor" includes about 77 customers between Strattanville and Clarion along U.S. Route 322. Those customers pay a higher monthly rate ($56 compared to $36 for the system's other customers) because their sewage is actually collected and treated by PAWC.
PAWC then bills the Strattanville Municipal Authority for the service. The Strattanville Municipal Authority owns that portion of the system.
It costs the SMA about $40,000 per year for the corridor customers.
In June, Davis told the SMA board rates for the corridor customers charged by PAWC had increased by $7.47 over the past three months.
It's not clear how a PAWC purchase of the "322 corridor" section would affect the bills of those customers. PAWC's Clarion Borough customers monthly bill also includes water service and other fees.
Davis told the CLARION NEWS the Strattanville Municipal Authority had been watching PAWC's negotiations with Farmington Township where PAWC is interested in purchasing the township water and sewerage systems.
Questions arose earlier this summer about the proposed Farmington sale, specifically to as to would the township have to seek competitive bids for the systems.
That sent attorneys for both PAWC and Farmington Township to the state second-class township code for answers.
PAWC now asserts, and township legal counsel Christy Logue agrees, the systems can be sold to a Public Utilities Commission-regulated utility company like PAWC without going through a bidding process.
Pennsylvania Act 12 of 2016 allows for the sale of publicly-owned systems like the Strattanville Municipal Authority sewerage system through a "fair market valuation approach."
The law allows the parties to the transaction to opt in to a new method of valuation, which takes the value of the system for ratemaking purposes as either the lower of the average of two independent fair market value appraisals -- one obtained by the utility buyer and one by the municipal seller -- or by the negotiated purchase price.
Prior to Act 12, system value for ratemaking was based on depreciated original cost, which would likely always result in a lower sale price than fair market value.
In addition, the new law requires the PUC to act within six months of the acceptance of the application.
Davis said PAWC has requested a large volume of records and information about the 322 corridor system.
The Strattanville Municipal Authority is expected to discuss the matter in October.