Township looking for buyer for its sewage system
07/30/2014 03:00PM ● Published by Lev
By Richard L. Gaw
New Garden Township is currently in the process of vetting two public utilities and one municipal authority, each of whom have expressed interest in owning and operating the township's sewage operations systems.
This initiative, discussed at the Board of Supervisors meeting on July 21, will involve the transfer of ownership for the township's sewage operations, which include two treatment systems and one collection systems. One is located on the east end of the township, behind the New Garden Shopping Center near the Kennett Borough. The other is located in the southern portion of the township, which was constructed near the Somerset Lake development to serve the development, as well as the Harrogate North and South and Middleton Green developments. The township also owns a collection system that serves the western portion of the township along Route 41, the contents of which are transported to a treatment system in Avondale.
The first company to show interest in the potential ownership of the township's sewage system is the Wilmington-based Aqua Treatment System, a leading industrial and domestic water treatment company that provides water treatment solutions to companies and domestic projects across the world.
The second entity to express interest in the township's sewage treatment system is Pennsylvania-American Water, who currently supply wastewater services to approximately 2.2 million people in nearly 400 communities throughout Pennsylvania.
The third interested entity, the Delaware County Regional Water Control Authority (DELCORA), is a municipal authority, who owns and operates three pump stations in Delaware County.
The township has already met with these entities in order to gauge their interest in the potential ownership of the township's sewage system. The request for proposal stage is expected to be issued in mid- to late September, which will yield offers from the bidders by November, which will then be assessed by the township's Sewer Commission and Board of Supervisors. Once the entity is chosen by the township, the Public Utility Commission will need to give their approval to the sale. Transfer of ownership is not expected to be completed until the middle of 2015.
Like most municipalities, the township bases its sewer charges on water consumption, broken down by four user groups -- residential, commercial 1, commercial 2 and industrial. The rate of payment is based on three graduated tiers of consumption -- zero to 5,000 gallons each quarter; 5,001 gallons to 10,000 gallons; and 10,001 to 15,000 gallons. The transfer of ownership of the systems are expected to lower the sewage rates currently being paid in the township.
"It's really looking long-term in the best interest of the rate payer," interim township manager Spence Andress said. "When you have a system such as New Garden's, you have a lot of infrastructure that needs to be maintained and over time replaced. A rate-based [system] is very finite, very limited. You spread those costs over that rate base, and as the costs go up, the rate payer is going to have to pay more and more to pay for those things that need to be done. These aren't optional things. It's not like painting the [township] building or doing something that isn't a necessary activity to maintain the system. When you look down the road, the age of the infrastructure and the cost of repair and replacement of these systems get to be substantial, in the millions of dollars.
"Looking long term, selling the facilities to one of the three entities that's been named, allows the company to spread those costs over a much larger rate base," Andress added. "No individual user in New Garden Township would be as significantly affected as they would be if that weren't the case."
In addition to the size of its monetary bid, the company will be chosen based on several factors, which will include the size and strength of the company; its geographic focus; its proximity to the township; the company's revenue stream; the rate of the company's focus on wastewater versus potable water; and which entity is most likely to devote the financial resources available to fund capital projects for the system in the future.